Exchange Traded Funds
Duff & Phelps is able to supplement our internally managed portfolios by drawing from the wide variety of Exchange Traded Funds ("ETFs") that are available in the marketplace. Exchange Traded Funds ("ETFs") are a very efficient way to achieve portfolio diversification. This efficiency is especially applicable to taxable portfolios as most ETFs are unlikely to have capital gain distributions due to their unique structure. The ETF market has exploded in recent years from 119 funds and assets of $151 billion five years ago to over 630 funds and approximately $600 billion of assets as of March 2008. Most ETFs are offered at relatively low internal expense ratios ranging generally from 20 to 75 basis points.
We recommend the use of ETFs offered by the largest firms, based on well established indices such as MSCI EAFE or the Russell 2000. In working with clients to help them select the appropriate ETFs to meet their specific investment objectives, Duff & Phelps is able to utilize its proprietary Efficient Frontier asset allocation analytical models to assist clients in determining the appropriate asset allocation strategies consistent with their individual risk tolerances.
Our investment management services will include the purchase and sale of ETF shares for the joint purposes of maintaining targeted asset allocations as well as tax management. After the end of each quarter, we send to each client our Investment Review which includes market commentary, a listing of holdings and transactions and pre-tax and after-tax returns for each asset class and their respective benchmark. Because Duff & Phelps has no affiliation with any of the ETF providers we are able to be very objective in our selection of the appropriate ETF to be utilized for each client.