SSGA expands ETF model portfolio range

State Street Global Advisors (SSGA) has expanded its ETF model portfolio range with the addition of a High Growth offering for advisers seeking to service younger investors.

Available to advisers on the Praemium, HUB24 and Netwealth platforms later this month, SSGA said the new option will complement its three existing risk-based portfolios – Moderate, Balanced and Growth – that invest in a range of asset classes and sectors across the risk spectrum.

According to SSGA, it first launched its ETF Model Portfolio capability in the Australian market in 2019, and now ranks among the top 20 most used investment managers by advisers who currently use managed accounts.

“We developed the High Growth option, with an allocation of almost 90 per cent to growth assets in response to demand from advisers, seeking a cost effective portfolio for their clients who are in the accumulation stages of their wealth building journey,” commented Kathleen Gallagher, SSGA managing director and head of ETF Model Portfolios in EMEA and APAC.

Gallagher noted that, with an estimated $3.5 trillion intergenerational wealth transfer underway in Australia, advisers are seeking solutions to service a client base which tends to be younger, have a longer investment horizon and a higher risk tolerance.

"49 per cent of existing managed account advisers believe it’s appropriate to hold the majority of assets in a managed account for accumulator clients,” she highlighted, referencing recent data from Investment Trends’ 2024 Managed Accounts Report.

According to the report, 64 per cent of current managed account users have used growth strategies in the past 12 months.

Investment Trends also underscored the proportion of Australian financial advisers now using managed accounts, having more than tripled from 18 per cent a decade ago to currently a record high of 56 per cent.

“Our Risk-Based ETF Model Portfolios employ a strategic asset allocation framework focusing on risk tolerances and long term return expectations, while managing exposure to risk in a cost efficient way through ETFs,” added Ben Regnat, SSGA’s APAC ex Japan head of investment solutions group.

Pointing again to Investment Trends’ recent analysis, SSGA said that 19 per cent of advisers are potential users of managed accounts, possibly taking the total possible reach in coming years to 75 per cent and making managed accounts the “pre-eminent solution” for financial advisers.

“Our process considers ETFs from all providers to ensure portfolio investment selection is not limited by sector, asset class or product issuer,” Regnat continued.

Moreover, the State Street Risk-Based ETF Model Portfolios are offered on platforms as separately managed account (SMAs). This remains the most widely used structure to implement managed accounts, SSGA concluded, with 80 per cent of advisers implementing managed accounts with an SMA on platform.