Exchange-Traded Funds Helps MEMBERS Trust Make National Ranking
The distinction is significant given Barclays' presence with $1.9 trillion in assets under management as of June 30, 2008, according to the company. MEMBERS Trust joined 24 other asset managers nationwide in the new guide, which "explores some of the innovative ways in which advisers are using ETFs to help clients meet their investment goals." The publication, which is only available to institutional investors, will be updated each quarter.
An ETF is an investment vehicle traded on stock exchanges like stocks, according to commodityonline.com. The fund holds assets such as stocks, bonds or commodities and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day.
MEMBERS Trust said in 2004 it was one of the first trust companies to offer an all ETF set of
portfolio allocations and as of Nov. 1, 2008 had $80 million in ETF assets under management. The company wanted to adopt a strategy that would reduce costs, offer transparency and create tax-efficient invest-
ment portfolios, according to John Largent, chief
As the only credit union-linked firm and the
only trust company to be featured in the Barclays' guide, Largent said he likes to think that picking the right ETFs has helped MEMBERS Trust stand out from the rest.
"Asset allocation will keep people for the long term. Performance-that's where people get hurt," Largent explained.
Given the market volatility, the trust company continues to believe that now, more than ever, diversification, low investment costs and an appropriate asset allocation is the most effective philosophy in building a customized and prudent investment plan for each of its clients. With no 12b1 fees and "no soft dollars being exchanged," ETFs are a part of that plan, said Neil Archibald, general counsel at MEMBERS Trust.
Still, ETFs had a rough 2008. Nearly 60 funds were liquidated compared to just five between 2003 and 2007, according to investwithanedge.com, which tracks the funds along with exchange-traded notes. First introduced in 1993 during a mutual fund- dominant market, Archibald said ETFs really took off in 2003. Today, there are roughly 250 of them in the market covering a number of sectors.
Largent said there is a place for ETFs, especially for those clients who relish calm investing. In fact, when he conducts training sessions for MEMBERS Trust's officers and representatives, he tells them the key question to ask clients is "what is the purpose of the money."
"We're not panicking at the lows, and we're anticipating the risk. That's been rewarding," Largent said. "The biggest compliment from a client was when he asked, 'Why are my friends going back to work when I'm still retired?'"