Below is courtesy of extract from ThinkAdvisor.com Sept 29 edition
Search far and wide, but you’re unlikely to find many financial advisors as shrewd about investing with exchange-traded funds as Shelley Bergman, managing director-senior portfolio manager of The Bergman Group at Morgan Stanley on Fifth Avenue in New York City.
Bergman was smart enough to start using ETFs more than eight years ago, when the flexible investment vehicle was in its infancy. Today, the ETF market boasts a whopping $2 trillion in assets and is the fastest growing product on the market. Bergman and his clients are, increasingly, reaping the rewards.
He is a 30-year-plus advisor and ranked No. 5 on Barron’s Top 100 Advisors list for 2014. A Chairman’s Club member, Bergman is the sole advisor of his eight-person team, managing about $3.5 billion in assets for high-net-worth and ultra-high-net-worth clients.
With a deep knowledge of the ETF universe, Bergman, 52, a Queens, New York, native, knows just how to make the most of these funds’ potential for boosted performance and better client outcomes.
So expert is Bergman that he’s the go-to guy for many other investment professionals, including hedge fund managers who hire him to manage their personal accounts. Indeed, one client who relies on his judgment is head of ETFs at a competing brokerage firm.
“He knows ETFs like the back of his hand, but he can’t pull the trigger at the right time to invest in them. There are a lot of people like that. After about 35 years in the business, I have no problem going into the burning building to try to find out whether we can make some money. It’s something I was born with,” says the tall, bespectacled Bergman, who was with Bear Stearns for 20 years before joining Morgan Stanley in January 2008.
Over two decades, the investments he has managed have far exceeded the major indexes, he says. In the last five years, the FA has stressed ETF investing and is, more and more, moving clients into these funds.
“History suggests that the vast majority of active managers underperform their benchmark. The benefits of ETFs are very, very strong,” Bergman says. “ETFs are game-changing: They give you the ability to mix stocks and bonds, and to make a sector investment in a particular area and get a very exposed piece of an asset allocation focused in that area.”
In the advisor’s overall book, 20–25% of clients are in ETFs, with at least $250 million invested in the funds daily. That amount can rise to as much as $400 million to $500 million depending on Bergman’s special short-term calls, which are typically contrarian. For his balanced accounts, about $200 million to $250 million is allocated to ETFs, which are managed with a proprietary, broad-based ETF-only strategy; closed-end funds are used occasionally. For his other platform, the advisor manages $250 million in ETFs and $500 million in individual stocks and bonds. Another $2.5–3 billion is in mostly fixed income.
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