E*Trade Unveils Portfolio Management Tool

E*Trade has rolled out a new advice solution that it says will “help investors navigate complex market dynamics.”

Managed Investment Portfolios make one-on-one professional portfolio management accessible to investors with an investment of $25,000 or more.  “Leveraging the asset allocation expertise of industry leader PNC Managed Investments, the mutual fund and ETF portfolios offer a range of investment styles from conservative to aggressive growth and feature automatic rebalancing to ensure proper diversification,” according to a press release.

E*Trade termed the offering a “a smart choice for individuals who are planning for retirement, saving for college, rolling over a 401(k) or simply investing a lump sum,” noting that customers begin with a complimentary goals assessment with an investment professional – either over the phone or in-person – to determine investment goals, risk tolerance and time horizon.

“As a result of the volatile markets, investors are looking for easy access to ongoing, high-quality advice that won’t chip away at their investment gains. They want to know that someone is watching out for their nest egg and working to ensure their portfolio stays balanced to help them reach their long-term investing goals,” said Michael Curcio, President, E*TRADE Capital Management. “Managed Investment Portfolios provide customers with high-quality, unbiased advice at a low barrier to entry through a channel that ensures solutions are focused on the customer’s individual goals.”

Product Structure

Structurally, PNC Managed Investments Inc. provides E*TRADE Capital Management with administrative services, investment research, portfolio selection recommendations and due diligence support for E*TRADE’s use in connection with its Managed Investment Portfolio offering. PNC Managed Investments offers recommended asset allocation models and associated screening of mutual funds and ETFs. The allocation models, mutual funds and ETFs are then reviewed and approved by E*TRADE Capital Management’s investment policy committee, though neither PNC Managed Investments Inc. nor its affiliates act as investment adviser or otherwise provide investment advisory services to Managed Investment Portfolio customers.

As a fully discretionary product, E*TRADE Capital Management reviews and approves the investment decisions and executes all the transactions in the portfolio, with customers paying what was described as “a low, asset-based fee”.

Investments for the Managed Investment Portfolios are selected using a proprietary “five-stage due diligence” model that:   

  • screens preliminary factors to identify investment options;
  • performs quantitative performance analysis including performance history, performance versus benchmark, diversification and portfolio turnover; 
  • evaluates qualitative factors including quality of fund family, investment team, strategy track record, and potential surprises; 
  •  is reviewed and approved by E*TRADE Capital Management’s investment policy committee; 
  • provides ongoing monitoring, risk management, and periodic rebalancing to make adjustments as needed with an eye toward achieving the portfolio’s long-term objectives. 

    “Managed Investment Portfolios are a key milestone in the evolution of our business strategy to focus on attracting mass affluent investors while gaining a greater share of our customers’ investable assets,” continued Curcio in the announcement. “Leveraging PNC Managed Investments’ robust platform and investment research expertise will allow us to expand the advisory products we offer over time into areas like separately managed and unified managed accounts.”

    More information about E*TRADE’s advice offerings is available at  www.etrade.com/managed.