This year remains busy for advisors as market volatility persists amidst a confluence of risk factors. Those advisors looking to allocate more time to clients may consider model portfolios for the numerous benefits they offer.
Model portfolios offer diversified exposure to asset classes in pursuit of an investment strategy. These strategies seek a variety of risk/return targets and are professionally managed. Using model portfolios in an advisor’s practice may free up valuable time and resources to meet more client-facing needs.
Not only do model portfolios allow for a combination of asset classes within a singular portfolio, but they also allow for a combination of strategy types. Perhaps one of the most popular in recent years, actively managed strategies hold strong appeal for investors. Active management creates the potential for flexibility and responsiveness to changing market conditions.
A Tactical Approach to Constructing Model Portfolios
Combining active strategies alongside passive ones provides both strategic and tactical advantages within a single hybrid portfolio. Natixis Investment Managers offers a tactical allocation and a risk-efficient model portfolio suite for advisors and investors. Both suites combine actively managed mutual funds alongside passive ETFs within their portfolios. Passive ETFs comprise roughly one-third of the portfolios and are tactically managed throughout the year. The core, strategic active mutual funds rebalance annually.
When building the portfolios, these models pull from the array of brands and managers underneath the Natixis umbrella. This creates a diverse portfolio comprised of strategies built on specialized expertise across a range of assets. It also benefits from the various research methodologies and due diligence practices employed by the managers.
The Natixis model portfolios also offer a differentiated time horizon that falls on the shorter end of the spectrum from a tactical and strategic standpoint.
“That allows us to be fairly opportunistic,” explained Brian Kmetz, Vice President and Portfolio Manager, Natixis Investment Managers Solutions, in a recent video. “We will see a little more turnover, but at the same time, we will be able to take advantage of some of these opportunities that tend to be shorter-term in nature.”
The Natixis model portfolios offer just one example of the potential benefits models may provide. By combining active strategies with passive and mutual funds with ETFs, these models demonstrate the range of possibilities when seeking portfolio alpha for investors.
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