European ETF white labelling firm HANetf has announced that it has launched six free to licence model portfolios, developed in partnership with Algo-Chain, using state of the art technology to screen extensive market, macro-economic and ETF data sets from around the world.
The firm writes that this is used alongside a human overlay to determine economic cycles and risk appetite in the markets and to capture the risk premia across various asset classes. The portfolios will be rebalanced every quarter.
The target audience for the model portfolios are financial advisers, wealth managers, private banks, execution only brokers, robo-advisers and any other money managers who want to offer ETF portfolios to their end clients. The firm writes that model portfolios have become a significant part of the US ETF market ecosystem and HANetf believes the same will happen in Europe.
The model portfolios are as follows:
• Balanced Portfolio
• Growth Portfolio
• Adventurous Portfolio
• ESG Growth Portfolio
• Future Trends Themed Equity Portfolio
• Digital Assets and Crypto ETP Portfolio
The Balanced, Growth, and Adventurous model portfolios use ETFs to provide exposure to equities, fixed income, commodities, and alternative assets. Each portfolio has a different asset allocation, giving it a different risk level, target volatility and target maximum drawdown, shown in the table below. Third party ETFs are used where appropriate to supplement the highly innovative range of HANetf ETFs, the firm writes, adding: “It is the norm that most ETF providers who offer model portfolios tend to only use in-house products, but HANetf believes a more open selection model is optimal.”
The ESG Growth Portfolio is also a multi-asset portfolio but investing in Impact Investing and ESG Themed ETFs. Impact Investing seeks to provide capital to address the world’s most pressing challenges in sectors such as renewable energy and other companies providing climate change solutions, the firm explains. The portfolio has around 12 per cent exposure to iClima Global Decarbonisation Enablers UCITS ETF (CLMA) and 6 per cent exposure to HANetf S&P Global Clean Energy Select HANzero UCITS ETF (ZERO). ZERO is a carbon neutral investment, using carbon offsets to neutralise all emissions associated with the portfolio’s holdings.
The Future Trends Themed Equity Model Portfolio (LINK) seeks to invest in ETFs that have exposure to the latest megatrends and themes. It comprises assets in equities across different regions and is run on a higher risk level than the classic portfolios.
Investors can access a wide range of disruptive themes, the firm says. Among its holdings are Electric Vehicle Charging Infrastructure UCITS ETF (ELEC), Sprott Global Uranium Miners UCITS ETF (URNM) and Grayscale Future of Finance UCITS ETF (GFOF). By taking a thematic approach, the portfolio does not allocate based on traditional geographic or sector categories.
With thematic investing increasingly popular, HANetf says that it has become the most extensive thematic ETF issuer in Europe, adding that the model portfolio shows how these ETFs can be incorporated into a thematic focused portfolio.
The Digital Assets and Crypto Model Portfolio seeks to invest in ETPs that give exposure to some of the largest crypto currencies and an ETF with a pure play exposure to the blockchain and digital assets sector. The individual crypto ETPs follow market-cap weighted approach with a maximum weight at rebalance of 20 per cent.
The portfolio also holds a 20 per cent position in a Digital Assets and Blockchain Equity ETF for diversification purposes by providing exposure to companies that have business operations in the field of blockchain technologies including cryptocurrency mining, blockchain technology or cryptocurrency trading and exchanges.
The portfolio provides exposure to digital assets and cryptocurrencies using both ETCs and ETFs, allowing the investor access through a robust, regulated wrapper but the firm warns that given exposure to crypto currencies, the portfolio is running at a high-risk level.
Hector McNeil, co-CEO and co-Founder of HANetf comments: “We are thrilled to introduce this new range of model portfolios. At HANetf, over the past four years, we have issued a range of innovative and market-first ETFs and ETCs. With these model portfolios, we are providing a way for investors to incorporate these ETFs and ETCs into a model of an investible portfolio. While the Themed Equity Model Portfolio and Crypto Model Portfolio include just HANetf products, our ESG and balanced model portfolios use other providers ETFs for ‘cheap beta’ building blocks for their “core” holdings. HANetf’s more specialist and innovative products are then used as satellite holdings.
“I have long been of the opinion that to catch up with the US ETF market there needs to be more provision of solutions that help investors construct intelligent ETF portfolios taking advantage of the lower costs of ETFs versus mutual funds and other wrappers. There is a gap between investors assessing the thousands of ETFs available and coherently building a portfolio. HANetf is also leading the way by using third party issuer ETFs where appropriate and not just using proprietary products. In the US we have seen a huge growth in ETF model portfolios and Europe is lagging. Offering free licences to financial advisers and asset managers who want to use these models is extremely powerful in further democratising using ETFs. The world of investment is increasingly moving towards democratisation and removal of barriers – the model portfolios are in that vein, being off-the-shelf solutions for investors.”