Diversification is vital to any investment portfolio. Exchange-Traded Funds (ETFs) have become one of the most popular vehicles for implementing a multi-asset strategy, as they offer broad diversification, low costs, and flexibility. As the industry trends continue to evolve, how can investors position themselves to capture potential upside in different market environments?

In this episode, Rusty and Robyn talk with Michael Gates, Managing Director and Head of Model Portfolio Solutions in the Americas at BlackRock. In his role, Michael leads BlackRock's suite of Target Allocation and Target Income models and mutual funds. Morningstar has awarded the Target Allocation ETF and Long Horizon ETF models that Michael manages a gold medal.

Michael talks with Rusty and Robyn about the ETF industry and model portfolios. Michael also shares his outlook for the overall ETF industry, why investors prefer ETFs to direct index solutions, and what Blackrock's multi-asset investment strategy entails.

Key Takeaways

[02:48] - How Michael got into financial services.
[05:00] - How BlackRock has evolved over the years.
[07:18] - Michael's outlook for the overall ETF industry.
[09:30] - Why investors prefer ETFs to direct index solutions.
[10:17] - The driving force behind the flow of mutual funds into ETFs.
[11:26] - Michael's multi-asset strategy.
[16:49] - Michael's rule of thumb when investing in alternatives and real assets.
[18:34] - The tools BlackRock provides to advisors.
[21:17] - Michael's thoughts on the possibility of a recession and how it might impact BlackRock's model portfolios.
[25:44] - Michael's personal investment strategy.
[27:44] - How Michael keeps his physical and mental health to perform well.
[30:05] - Book and content recommendations from Michael.

Quotes

[08:11] - "ETFs are a big part of what financial advisors want to use because ETFs are reliable in terms of what they deliver, and they're low fees relative to legacy mutual funds." ~ Michael Gates

[10:09] - "The ability to take and deliver in kind is something that you can only do with an ETF structure. It's not something you can do with the direct index." ~ Michael Gates

[10:31] - "The trend that flows from mutual funds into ETFs is partly driven by the transition that we've observed of the brokers becoming advisors." ~ Michael Gates

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