BEC generally utilizes exchange traded funds (ETFs) rather than active managers or traditional mutual funds to achieve our asset allocation, which helps to reduce investment costs, improve transparency, and eliminate the manager selection risks associated with active management. Since these ETFs track passive indices, the majority of our time is spent on asset allocation decisions as opposed to individual manager evaluation.
BEC is agnostic when it comes to ETF fund sponsors. No ETF family is “best in breed” within every asset class, so our portfolios have included funds from many different ETF issuers, including iShares, Vanguard, Pimco, SPDR, WisdomTree, Deutsche Bank, Guggenheim, Van Eck, and Invesco, among others. We have invested considerable time evaluating the various ETF options within each asset class. The criteria used in making these selections include the specific underlying passive index, the index replication methodology, liquidity and market capitalization of the ETF, relative cost, tracking error vs. the underlying index, tax efficiency, and premium/discount statistics.