Ibbotson Selected by ING Financial Advisors to Create Model Portfolios for Active ETF Strategies and Tax-Sensitive Strategies

August 13, 2008 Chicago, IL Share: Print Subscribe to Email Alerts

Ibbotson Associates, a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. (Nasdaq: MORN), has been selected by ING Financial Advisers, LLC to create a family of active exchange-traded fund (ETF) model portfolios that dynamically change allocation to take advantage of price trends. Ibbotson will also develop a set of tax-sensitive model portfolios that are optimized to produce low tax liabilities for investors. All of the portfolios are designed for use by financial advisors within ING Financial Advisers, a registered investment advisor. Ibbotson serves as an independent consultant to ING Financial Advisers.

“The ING Momentum ETF Strategy™ program is a unique approach combining investment techniques and utilizing low-cost ETFs in a way that brings value to our clients. Combining the expertise of ING and Ibbotson will allow our representatives to present innovative financial solutions that address our clients’ financial needs in many different areas,” said Ronald Barhorst, president ofING Financial Advisers, LLC. “We have found that higher net worth investors who understand equities are seeking exposure to more market segments and asset classes for their retirement and longer-term portfolios. The use of ETFs with broader asset allocations is a potential solution to provide greater market exposure.”

Ranging from conservative to aggressive, Ibbotson’s active ETF portfolios start with a strategic asset allocation to an extremely diverse set of asset classes, similar to the most sophisticated institutional portfolios. Next, Ibbotson ranks the asset classes in the active ETF portfolio based on performance. The top asset classes are overweighted while the bottom asset classes are underweighted to try to capture the momentum effect in the stock market. The portfolio comprises 20 asset classes, including traditional domestic and international equity and fixed income as well as domestic and international real estate investment trusts, listed private equity, emerging market bonds, small-cap international equity, commodities, treasury inflation-protected securities, and high-yield bonds.

“A large body of academic work suggests that asset returns have some degree of predictability. Our dynamic momentum methodology used in these active ETF portfolios is designed to take advantage of this market behavior,” said Peng Chen, president of Ibbotson Associates.

For the ING Wealth Management Tax Sensitive Strategy™, Ibbotson constructs the asset allocation policy and selects funds, taking into consideration the tax implications for investors. Ibbotson first develops after-tax capital market assumptions for each asset class to construct the asset allocation policy. Ibbotson then selects the funds according to its proprietary tax-efficiency measure.

“We can’t control the gyrations of the market, but we can create portfolios that are diversified and tax efficient to help investors achieve more stable performance and keep more of the returns,” Chen added.

One area of concern to investors is the effect of taxes on portfolio earnings. “With Ibbotson’s assistance we have also developed an investment advisory program that seeks to minimize the tax effect on a portfolio while taking appropriate levels of risk to maximize a portfolio’s return. We are excited about these programs and the solutions we can bring to our clients,” Barhorst added.

This initiative is an extension of Ibbotson Associates’ consulting relationship with ING Financial Advisers. Ibbotson provides investment analysis and fund selection and monitoring services for the ING Wealth Management discretionary investment advisory program. Ibbotson is also a consultant to the ING VA Lifestyle Golden Select Program.

Press inquiries

Alexa Auerbach, Morningstar, 312-696-6481 or alexa.auerbach@morningstar.com
Deborah Pont, ING, 860-580-2678 or deborah.pont@us.ing.com

About Morningstar, Inc. and Ibbotson Associates

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of Internet, software, and print-based products and services for individuals, financial advisors, and institutions. Morningstar provides data on more than 280,000 investment offerings, including stocks, mutual funds, and similar vehicles. The company has operations in 18 countries and minority ownership positions in companies based in three other countries.

Ibbotson Associates is a leading independent asset allocation provider offering investment advisory services, retirement advice programs, and customized research. Ibbotson applies academic research to create real-world strategies for financial institutions. Founded in 1977, Ibbotson is a registered investment advisor and wholly owned subsidiary of Morningstar, Inc.

About ING

ING Groep, N.V. (ING) is a global financial institution of Dutch origin offering banking, investments, life insurance and retirement services to over 85 million private, corporate and institutional clients in more than 50 countries. With a diverse workforce of about 130,000 people, ING comprises a broad spectrum of prominent companies that increasingly serve their clients under the ING brand. Securities and Investment Advisory Services offered through ING Financial Advisers, LLC (member SIPC) One Orange Way Windsor, CT 06095. ING Financial Advisors is a wholly owned subsidiary of ING Groep, N.V.

©2008 Ibbotson Associates, Inc. All rights reserved. The Ibbotson name and logo are registered marks of Ibbotson Associates, Inc. Ibbotson Associates is a registered investment advisor and wholly owned subsidiary of Morningstar, Inc.