In recent years, the non-stop growth of ETF managed portfolios has been one of the biggest stories in the U.S. retail investment space. Since 2008, this industry has exploded from relative obscurity to achieve more than $100 billion in assets through the second quarter of this year, according to Morningstar.

In a typical ETF managed portfolio, a financial advisor/RIA outsources investment management to an "ETF strategist," who builds strategies by combining ETFs. Although most ETF managed portfolios are structured as separate accounts, investors don't get much customization or tax management, and their personal advisors usually have little or no influence over the strategist's process and decisions.

In effect, these products are "packaged separate accounts" that work much like actively managed mutual funds or turnkey asset management programs (TAMPs), except that strategies are constructed from ETFs rather than individual securities or mutual funds. Many strategists follow quantitative systems, readjusting ETF exposures by formula.

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