Currently, there are more than 2,000 exchange traded funds (ETFs) available, representing over $3.4 trillion in assets. We consider ETFs to be an ideal complement to our Risk Budgeting Methodology because of their multitude of potential benefits. CLS uses ETFs to build Risk-Budgeted, targeted, or strategically managed portfolios for investors seeking to build capital, generate income, protect wealth, or minimize tax consequences.
CLS’s ETF models are ranked by Morningstar in their quarterly report. Our most aggressive ETF model ranks among the top 12% of all ETF portfolios tracked by Morningstar* over the past five years. More importantly, the beta – a measure of portfolio volatility – of our ETF portfolios remains very close to each portfolio’s stated risk level. This means CLS carefully monitors the risk of our portfolios so the investor is not exposed to more or less risk than he or she can handle.
*Based on Morningstar data of managed ETF portfolios categorized by attributes and classifications. Rankings calculated using annualized total returns over 5 years from 6/30/2012 to 6/30/2017. Risk Budget (RB) models 75, 80, 90, and 100 based on data for all managed ETF portfolios; 881 portfolios have data available under this calculation.
**CLS Investments, LLC (“CLS”) was selected as a winner for WealthManagement.com’s 2016 Industry Awards in the category, Asset Managers- ETF Strategist. The WealthManagement.com Industry Awards program is an unbiased, third-party organization seeking to recognize companies that support financial advisors. Nominations for the WealthManagement.com Industry Awards were based on a submission from the company describing how it helps financial advisors work with clients. The award goes to the company selected by a Judges Panel made up of ten industry professionals. Winners of the award for each category were announced September 29, 2016. WealthManagement.com is not affiliated with CLS. Ratings and awards may not be representative of any one client’s experience and are not indicative of CLS’s future performance.
Explore Why CLS Likes ETFs
- Transparency: Most ETFs report exact holdings daily, so investors can verify that the ETF is closely tracking its benchmark.
- Intra-Day Trading: Like stocks, ETFs trade throughout the day, so their price fluctuates with market supply and demand.
- Lower Cost: Because ETFs do not have minimums, front-end loads, or redemption fees, they can offer significant cost savings.
- Diversification: ETFs are designed to track market indexes that may contain hundreds or thousands of securities.
- Stable Market & Risk Exposure: ETFs can provide much more stable market exposure than mutual funds, allowing CLS to minimize style drift.
- Tax Efficiency: ETFs typically distribute fewer capital gains to shareholders than traditional mutual funds.