PowerShares Capital Management is focusing its efforts on distribution, particularly on educating financial advisors. After years of expanding its exchange-traded fund line, the firm believes the future of ETF growth will come from explaining how ETFs can fit in portfolios. "Our [wholesaling] efforts will mirror more [closely] the traditional mutual fund model," said Bruce Bond, president and ceo.
Bond said there are differences between the models because ETF margins are lower. As a result the focus will be on ETFs themselves rather than broader value added offerings. "It's about education and knowledge, helping advisors know the value of ETFs and how they operate and less on generic, holistic themes," said Bond. He added that he thought it would be several years before there is mass knowledge of ETFs among advisors.
The growth of unified managed accounts may help power ETF growth, as advisors will invest in smaller, more niche ETFs as part of a broader UMA. Bond said PowerShares wholesalers are working with UMA sponsors to show how ETFs fit in such portfolios. Bond added that the firm is also targeting institutions, including fund selection units at wirehouses, hedge funds and consultants.