Job: ETF strategist.
The role: Like a portfolio or asset manager, ETF strategists manage their clients’ investments, but are primarily focused on investing in exchange-traded funds, or ETFs.
These increasingly popular investment vehicles hold a collection of assets, including stocks, commodities and bonds, and often follow a specific index, sector or geographical area. According to the Canadian ETF Association, ETFs offer investors a relatively low-cost and tax-efficient investment vehicle with stock-like features.
“ETF strategists are portfolio managers who build investment portfolios for clients and financial advisers by using mostly ETFs as the underlying investments in portfolios or models,” explained Pat Dunwoody, the executive director of the Canadian ETF Association. “These ETF strategists often run several asset allocation models for investors to choose from, ranging from conservative, balanced and growth-oriented to a host of other more specialized models.”
Ms. Dunwoody explains that ETF strategists are typically given authorization to executive trades within client accounts, however some simply make recommendations for brokerage firms which conduct the actual trading for end investors.
Salary: The salary of an ETF strategist can range widely depending on their employer and compensation structure. For example, those who run their own firms will have compensation closely tied to performance, while those employed by large investments dealers or banks will be compensated based on a combination of base salary and bonuses.
“An experienced or ‘star’ portfolio manager can make a lot of money; others may be struggling to get by or establish themselves or keep their firms alive,” explained Ms. Dunwoody. “Over $70,000 could be [a likely] starting point for a junior or supporting role as part of a portfolio management team, for example as an analyst on that team.”
According to a survey conducted by global human resources consulting firm Robert Half, more than half of all portfolio managers in Canada make $130,000 or more, not including additional performance-based bonuses. For managing partners, the 50th percentile for earnings in Canada is $160,000, according to the survey. Ms. Dunwoody confirms that compensation for ETF strategists are typically consistent with other portfolio managers.
Education: In order to become an ETF strategist, Canadians are typically required to first earn a CFA Charter by completing an educational program and passing an exam administered by the Chartered Financial Analyst Program.
“In addition, most portfolio managers have an undergraduate university degree in business or economics and often an MBA with a concentration in finance, accounting or quantitative mathematics,” Ms. Dunwoody said.
She adds that most ETF strategists also seek additional certification through either the International Centre for Pension Management (ICPM) or the Investment Industry Regulatory Organization of Canada (IIROC).
Job prospects: While stand-alone ETF strategist roles are few and far between, Ms. Dunwoody is confident the role will be in “large demand” in the coming years based on recent trends in the wealth management industry.
“ETFs have become an integral part of portfolio management and are accepted and used by the vast majority of asset managers now,” she said. “You may not see job postings for ETF strategists, but you can certainly find jobs for portfolio managers and almost every firm will be incorporating ETFs into their asset management program at this point.”
Challenges: In a highly regulated industry, many ETF strategists struggle to keep up with regulatory and operational demands. “Most portfolio managers are looking for help, relief, support so that they can focus on their profession to a greater extent,” Ms. Dunwoody said. “If you have your own portfolio management firm, there is also the need to sell your services which may be difficult – and may also not be part of the individual’s core competency.”
Why they do it: According to Ms. Dunwoody, most pursue a career in finance out of a deep interest in capital markets and a passion for finance and investing. “Very few, if any, portfolio managers go into the profession just because of the potential for high earnings,” she said.
Misconceptions: Though it’s a common and widely known role in the United States, Ms. Dunwoody says designated ETF strategists have only just begun to catch on in Canada, and most on this side of the border are still unaware of their existence.
As a result many associate it with portfolio management, but Ms. Dunwoody adds that there are key ways in which the roles are distinct. “It is a different kind of research and implementation, and a different kind of expertise; global, multi-asset, and sometimes, tactical,” she said.
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