European white-label ETF provider HANetf has unveiled a suite of six model portfolios constructed solely using ETFs.
Hector McNeil, co-CEO and co-Founder of HANetf.
Developed in partnership with fin-tech company Algo-Chain, the portfolios are aimed at financial advisers, wealth managers, private banks, execution-only brokers, robo-advisers, and other money managers who wish to offer ETF portfolios to their end clients.
Each portfolio utilizes Algo-Chain’s proprietary investment technology combined with a human overlay to guide its asset allocation.
The process involves analyzing market, macroeconomic, and ETF data sets globally to determine the stage of the economic cycle and current risk appetite in the markets in order to effectively capture risk premia across various asset classes.
Rebalanced on a quarterly basis, the six model portfolios are as follows: Balanced, Growth, Adventurous, ESG Growth, Future Trends Themed, and Digital Assets & Crypto.
The Balanced and Growth portfolios provide diversified exposure to equities, fixed income, and commodities, while the Adventurous portfolio also contains a small allocation to alternative assets. The Balanced, Growth, and Adventurous portfolios currently have weighted total expense ratios (TERs) of 0.221%, 0.267%, and 0.291%, respectively.
The ESG Growth portfolio, meanwhile, also covers equities, bonds, and commodities but is constructed solely from ETFs delivering ESG-tailored and impact investing strategies. Its weighted TER is currently 0.402%.
Each of these four ‘classic’ multi-asset portfolios utilizes third-party ETFs as the ‘cheap beta’ building blocks for their core holdings and then deploys HANetf’s thematic, commodity, and crypto products as satellite holdings.
The risk level, target asset allocation, target volatility, and target maximum drawdowns for each of these portfolios are shown in the table below.
Source: HANetf.
The Future Trends Themed and Digital Assets & Crypto portfolios are constructed solely using ETFs offered by HANetf.
The Future Trends Themed portfolio invests solely in equity ETFs, providing exposure to a range of disruptive megatrends such as electric vehicles, space commercialization, uranium mining, online retail, the metaverse, the future of finance, and decarbonization technologies, among others. The portfolio exhibits a higher risk level than the classic portfolios and, by taking a thematic approach, does not allocate based on traditional geographic or sector categories. The portfolio currently has a weighted TER of 0.714%.
Finally, the Digital Assets & Crypto portfolio invests in ETPs targeting the largest individual crypto assets. The crypto ETPs are weighted according to the market capitalization of their underlying token subject to a cap of 20% at each rebalance. The portfolio also holds a 20% position in an ETF delivering pure-play exposure to companies operating within the blockchain and digital assets sector including firms with business activities linked to cryptocurrency mining, blockchain technology, or cryptocurrency trading and exchanges. The portfolio’s weighted TER is currently 1.60%.
Commenting on the portfolios’ introduction, Hector McNeil, co-CEO and co-Founder of HANetf, said: “We are thrilled to introduce this new range of model portfolios. At HANetf, over the past four years, we have issued a range of innovative and market-first ETFs and ETPs. With these model portfolios, we are providing a way for investors to incorporate these ETFs and ETPs into a model of an investible portfolio.
“I have long been of the opinion that to catch up with the US ETF market there needs to be more provision of solutions that help investors construct intelligent ETF portfolios taking advantage of the lower costs of ETFs versus mutual funds and other wrappers. There is a gap between investors assessing the thousands of ETFs available and coherently building a portfolio. In the US we have seen a huge growth in ETF model portfolios and Europe is lagging. Offering free licenses to financial advisers and asset managers who want to use these models is extremely powerful in further democratizing using ETFs. The world of investment is increasingly moving towards democratization and removal of barriers – the model portfolios are in that vein, being off-the-shelf solutions for investors.”