Managed portfolios seem to becoming more popular as more people want to invest, but aren’t sure how.
The practice of portfolio management has been around a long time but has more recently become part of the mainstream as portfolio management services are now accessible to the average person (who may have just a few thousand dollars to invest). Companies like Betterment and WealthFront (also called robo advisors) have begun to popularize the concept.
What is a managed portfolio or what are portfolio management services? Generally, a managed portfolio is one in which a professional manages investments on a client’s behalf. Typically, the client will pay a flat or sliding-scale fee based on the portfolio size. The fee is calculated by multiplying a percentage (such as 0.25% or 1.0% set by the investment or brokerage firm) by the assets under management (AUM). The AUM represents the dollar value of investments being managed.