ETF champion issues stark warning

Portfolio manager says failure to move on from backward-looking approach will "do harm to clients"

ETF champion issues stark warning

When Ken MacNeal took to the stage to receive this year’s Wealth Professional Award for ETF Champion of the Year, it was the chance he wanted. Not to bask in personal glory, but to have a soapbox to promote the investment vehicle.

More pointedly, Calgary-based MacNeal, director, wealth management and portfolio manager at Richardson GMP, wanted to tell backward-looking advisors that burying their heads in the sand will do harm to their clients.

MacNeal believes the investment landscape of the next 20 years will be a vastly different proposition to the next 20 and that ETFs offer the flexibility and transparency to handle this change.

He added that money managers who base their strategy on simply massaging historical data via robos are in for a rude awakening.

Speaking to WP after collecting his award, which was sponsored by RBC Global Asset Management, he said: “I believe in a pro-active approach to investing, not calculating what the last 20 years was like because I do believe we are heading into a different future.

“A robo-type user of ETFs on a backward-looking thing where you just set a policy and tweak it once in a while as if the past is going to be the same as the future? That is not going to work here because the immediate future, especially in Canada, is so uniquely different and potentially very dangerous.

“Also, with Trump and other [global] things, the future is going to be different than the past, so you have to proactively look forward.”

MacNeal went so far as to call 2018 a transition year for advisors’ investment philosophy, adding that the edge when chasing returns will increasingly come from the portfolio manager’s individual ability.

He said: “Those people who are simply backward-looking and have a static approach that worked in the past are going to do harm to clients. By setting up a fee structure when dealing with a client, then the smart beta is going to be the advisor or the portfolio manager being smart, listening to the economist of your company and listening to industry specialists to identify things in the future.”


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