Morningstar ETF Managed Portfolios Landscape Report Q1 2017

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1 Morninstar ETF Manaed Portfolios Landscape Report Q Contents Landscape Hihlihts 3 ETF Manaed Portfolio Attributes Universe Chanes Exhibit 3 ETF Manaed Portfolio Strateies Exhibit 4 Attribute Groupins (Ranked by 5-Year Return) and Selected Risk Statistics Exhibit 5 Selected Return Information Exhibits 6 and 7 Selected Asset Information Exhibits 8, 9, and 10 Summary Return Information Exhibits 11 and 12 Blended Benchmark Information Exhibit 13 Ben Johnson, CFA Director of Global ETF Research ben.johnson@morninstar.com Executive Summary ETF manaed portfolios are investment strateies that typically have more than 50% of portfolio assets invested in exchane-traded funds. Primarily available as separate accounts, these portfolios represent one of the fastest-rowin sements of the manaed-account universe. Professional money manaers are packain portfolios of ETFs into investment strateies to meet a wide array of investor and advisor demands. Morninstar s proprietary classification system for ETF manaed portfolios consists of four main attributes: Universe, Asset Breadth, Portfolio Implementation, and Primary ETF Exposure Type. This system relies on our analysis of the investment stratey and disclosed portfolios and aids key decision-makers in better understandin the philosophies underlyin this rowin crop of investment strateies. Growth in assets from advisor demand is bein driven by multiple factors. The fiduciary standard continues to move forward as the baseline philosophy for manain client portfolios, and, as a result, rowth in the fee-based model is tiltin portfolios toward lower-cost, broad-based investments for a larer part of client portfolios, with a focus on asset allocation. Key Takeaways Morninstar was trackin 950 strateies from 169 firms with total assets of $99.7 billion throuh March Total assets in these strateies as reported to Morninstar increased 17.6% in the first quarter of Thouh oranic rowth in this space perked up after havin stalled in the final quarter of 2016, it is important to note that approximately $8.8 billion of the $14.9 billion quarter-over-quarter increase in assets was driven by the addition of new strateies to our database. Seven of the 20 strateies with the larest quarter-on-quarter increases in assets were vanilla stock/ bond strateic asset-allocation portfolios. The three larest ETF providers now occupy three of the five top spots in the ETF Manaed Portfolios leaue table.

2 Pae 2 of 60 Landscape Hihlihts in ETF manaed portfolios increased in the first quarter of At the end of March, strateies in Morninstar s database had collective assets under manaement and assets under advisement of $99.7 billion. The bulk of the quarter-over-quarter rowth was attributable to the addition of new strateies to our database. The remainder was driven by the continued momentum bein enjoyed by four of the five larest operators in the space. Vanuard, RiverFront, State Street, and BlackRock added a collective $2.3 billion in assets to strateies that had been included in our database as of Dec. 31, Seven of the 20 strateies with the larest quarter-on-quarter increases in assets were vanilla stock/ bond strateic asset-allocation portfolios. This marks a continuation in the shift of investor preferences in this space that was spurred by the implosion of a handful of hih-flyin tactical strateies just a few years ao. Global strateies, which account for about 36% of all assets in ETF manaed portfolios, ained back some round relative to their blended benchmark in the first quarter. That said, the median stratey in this cohort was still lain its boy on a trailin one-year basis at the end of March. Elsewhere, U.S. equity strateies are ettin left in the dust. The median stratey in the cateory has laed the Morninstar U.S. Market Index over the trailin one-, three-, five-, and 10-year periods. The median stratey s shortfall was nearly 4 percentae points on an annualized basis over the trailin one-, three-, and five-year periods. Manaers in this roup are clearly strulin to keep pace with a U.S. stock market that has a full head of steam. Columbia made its debut in the landscape this quarter. The firm s three strateies have collective assets under manaement of $3.4 billion.

3 Pae 48 of 60 United States Alternative Beacon Vantae 3.0 Alternative 8/1/16 Hybrid All-Inclusive 0.0 Kaizen Alpha Seeker 10/3/11 Tactical All-Inclusive Astor Dynamic Allocation 1/3/05 Tactical All-Inclusive , Green Inv Mt Guardian Alternatives 9/1/09 Tactical All-Inclusive CLS Macro Inflation 4/1/14 Tactical All-Inclusive TAMP US Tactical ETF L/S - PULSE 1/2/13 Tactical Broad Market 0.1 FFCM Dynamic Core Absolute Return 12/31/14 Tactical All-Inclusive Efficient Market Dynamic Volatility 1/1/16 Tactical All-Inclusive United States Alternative Median United States Balanced Clark Naviator MultiStratey 75-25(SAI) 9/1/06 Hybrid All-Inclusive Clark Naviator MultiStratey 50-50(SAI) 11/1/06 Hybrid All-Inclusive isectors Post-MPT Moderate Allocation 3/3/08 Hybrid Sector Efficient Market Years Aressive 2/1/05 Hybrid All-Inclusive Efficient Market Years Moderate 6/1/05 Hybrid All-Inclusive Efficient Market Years Consvt 4/3/06 Hybrid All-Inclusive Efficient Market 6-10 Years Aressive 9/1/05 Hybrid All-Inclusive SinalPoint Balanced Point 3/31/09 Hybrid All-Inclusive Morninstar ETF Moderate Growth* 12/30/10 Hybrid All-Inclusive Efficient Market 6-10 Years Moderate 11/1/04 Hybrid All-Inclusive Efficient Market 2-5 Years Aressive 4/1/05 Hybrid All-Inclusive Efficient Market 6-10 Years Conservative 7/1/05 Hybrid All-Inclusive Efficient Market 2-5 Years Moderate 1/3/06 Hybrid All-Inclusive Appleton Group-Conservative 7/1/11 Hybrid Broad Market Morninstar ETF Income & Growth* 12/30/10 Hybrid All-Inclusive Efficient Market 2-5 Years Conservative 4/3/06 Hybrid All-Inclusive Beacon Vantae 3.0 Balanced 8/1/16 Hybrid Sector 78.7 Beacon Vantae 3.0 Aressive 8/1/16 Hybrid Sector 58.2 Beacon Vantae 3.0 Conservative 8/1/16 Hybrid Sector 5.6 Cumberland Total Return Balanced Port 12/31/08 Strateic All-Inclusive Foy SELECTOR Conservative Growth 5/1/08 Strateic All-Inclusive Clark Naviator Strateist Core 5/1/09 Strateic Broad Market Madison ETF Moderate Growth 2/1/10 Strateic All-Inclusive Morninstar ETF Strateic Mod Gr & Inc* 4/29/05 Strateic Broad Market , Members Trust Balanced ETF 1/3/06 Strateic Broad Market DT Moderate Growth & Income 9/19/08 Strateic All-Inclusive DT Conservative Growth & Income 9/30/08 Strateic All-Inclusive Foy SELECTOR Balanced Growth 2/1/08 Strateic All-Inclusive First Trust Morninstar 40/60* 5/1/09 Strateic Broad Market Madison ETF Moderate 2/1/10 Strateic All-Inclusive Members Trust Conservative ETF 5/1/06 Strateic Broad Market Transamerica I-Series Portfolio III 6/18/07 Strateic All-Inclusive Tandem Conservative Portfolio 5/2/11 Strateic All-Inclusive Foy SELECTOR Income & Growth 2/1/11 Strateic All-Inclusive Lockwood Asset Allocation Portfolios II 10/1/03 Strateic Broad Market Incl. = counted in related stratey * An investment advisory subsidiary of Morninstar, Inc., manaes this portfolio or receives fees for providin investment consultin services to this portfolio sadvisor. These fees are mainly based on portfolio assets under manaement. This portfolio is not sponsored, issued, marketed, or sold by Morninstar,

4 Pae 49 of 60 EAM Asset Allocation Moderate Conservati 2/1/11 Strateic All-Inclusive Morninstar ETF Strateic Cons Gr & Inc* 4/29/05 Strateic Broad Market Transamerica I-Series Portfolio II 6/18/07 Strateic All-Inclusive EAM Asset Allocation Conservative 2/1/11 Strateic All-Inclusive Alpha Dynamics ODS Stable Growth 10/3/11 Strateic All-Inclusive 7.8 Clark Naviator Style Preferred Inc&Gro 10/1/04 Tactical Broad Market SSI Flexible Allocation Stratey 5/1/09 Tactical All-Inclusive Stadion Growth Stratey (QDIA Eliible) 4/2/07 Tactical Broad Market Stadion Moderate Stratey (QDIA) 4/2/07 Tactical Broad Market Stadion Balanced Stratey(QDIA Eliible) 4/2/07 Tactical Broad Market Stadion Conservative Stratey (QDIA) 4/2/07 Tactical Broad Market TTM Moderate 6/2/14 Tactical All-Inclusive Trademark Tactical Risk Stratey 10/1/07 Tactical All-Inclusive 30.5 United States Balanced Median Hybrid Median Strateic Median Tactical Median United States Balanced Blended Benchmark United States Equity Efficient Market 20 Plus Yrs Aressive 11/1/04 Hybrid All-Inclusive Efficient Market 20 Plus Years Moderate 1/3/05 Hybrid All-Inclusive Green Inv Mt Guardian Mosaic 7/3/00 Hybrid All-Inclusive Efficient Market 20 Plus Years Consvt 5/1/06 Hybrid All-Inclusive SinalPoint Sinal 10 3/31/09 Hybrid Sector Salient Tactical Growth 8/3/09 Hybrid Broad Market Appleton Group-Moderate 4/1/11 Hybrid Broad Market WestEnd Advisors US Sector 12/31/12 Hybrid Sector PCM Dynamic Risk Heded U.S. Growth 4/1/16 Hybrid All-Inclusive Hillswick S&P 500 Sector Selection 9/30/08 Strateic Sector Churchill ETF Sector Rotation 10/1/07 Strateic Sector Raylor Strateic US Equity SMA 1/3/06 Strateic All-Inclusive isectors Domestic Equity Allocation 7/1/10 Strateic Broad Market IRON S&P 500 Equity Plus 5/2/11 Strateic Broad Market Madison ETF Aressive 2/1/10 Strateic All-Inclusive SSWM Strateic Allocation Model 75/25 8/29/03 Strateic Broad Market Madison ETF Growth 2/1/10 Strateic All-Inclusive Swan Defined Risk Stratey 7/1/97 Strateic Broad Market Swan Defined Risk Stratey All Accounts 7/1/97 Strateic Broad Market Winterset Active/Ede Diversified Growth 2/1/13 Strateic All-Inclusive Nav Tactical US Equity Sector Plus 2/1/13 Strateic Sector Nav Tactical US Equity Sector Pl ft ADEX 2/1/13 Strateic Sector Stadion Master Domestic Equity 12/31/15 Strateic Broad Market Invesco Smart Beta U.S. Equity SMA Wrap 8/1/16 Strateic Broad Market 0.0 Niemann Dynamic 2/20/97 Tactical Sector Incl. = counted in related stratey * An investment advisory subsidiary of Morninstar, Inc., manaes this portfolio or receives fees for providin investment consultin services to this portfolio sadvisor. These fees are mainly based on portfolio assets under manaement. This portfolio is not sponsored, issued, marketed, or sold by Morninstar,

5 Pae 50 of 60 Main Manaement Active - US Lare Cap 9/30/02 Tactical Sector Clark Naviator U.S. Style Opportunity 1/3/05 Tactical Broad Market Clark Naviator U.S. Style Opp (SAI) 1/3/05 Tactical Broad Market Niemann Risk Manaed 9/30/96 Tactical Sector Cumberland - US Equity ETF 12/31/99 Tactical All-Inclusive Green Inv Mt Guardian Sector 7/1/93 Tactical Sector TTM Growth 6/1/09 Tactical All-Inclusive Braver Tactical Equity Sector Rotation 7/1/96 Tactical Sector Clark Naviator Sector Opportunity 1/3/07 Tactical Sector isectors Post-MPT Growth Allocation 2/1/05 Tactical Sector Clark Naviator Style Preferred Core 9/1/04 Tactical Broad Market BCM U.S. Sector Rotation 2/1/11 Tactical Sector BCM U.S. Sector Rotation (Monthly) 7/1/10 Tactical Sector Niemann Dynamic Sector 2/20/08 Tactical Sector Confluence Aressive Growth 8/1/08 Tactical All-Inclusive Astor Sector Allocation 1/3/05 Tactical All-Inclusive RevenueShares Strateic Allocation 7/1/11 Tactical Broad Market BCM AlphaDEX U.S. Sector Rotation 9/1/11 Tactical Sector RP Tactical US Equity 11/1/11 Tactical Sector Niemann Risk Manaed Sector 1/24/96 Tactical Sector Hays Advisory Domestic Equity ETF 4/2/12 Tactical Sector Stadion Tactical Growth Stratey 5/3/04 Tactical All-Inclusive RP Tactical US Equity FT 3/1/12 Tactical Sector PVG Dynamic Core ETF 10/1/01 Tactical All-Inclusive Innealta ETF Sector Rotation Core 12/31/09 Tactical Sector Churchill Premier Wealth Tactical 10/1/96 Tactical All-Inclusive Braver Tactical Opportunity 12/31/85 Tactical All-Inclusive Braver Tactical Balanced 12/31/03 Tactical Broad Market Robinson Market Opportunity 12/31/03 Tactical Broad Market Good Harbor Tactical Core US 4/30/03 Tactical Broad Market Lonview Capital Dynamic Lare Cap SMA 7/12/12 Tactical All-Inclusive Julex Dynamic Sector Stratey 11/1/12 Tactical All-Inclusive WSTCM Sector Select Risk-Manaed 11/30/12 Tactical Sector Optimus Global Rotation 6/3/13 Tactical Broad Market BCM Advantae U.S. Sector Rotation 1/31/14 Tactical Sector BCM U.S. Small Cap Sector Rotation 3/10/14 Tactical Sector Newfound Risk Md Small-Cap Sec Cmpst 11/27/13 Tactical Sector FFCM Dynamic All Cap Sector Rotation 4/1/14 Tactical Sector FFCM Dynamic Lare Cap Sector Rotation 4/1/14 Tactical Sector FFCM Dynamic Global Equity 4/1/14 Tactical All-Inclusive Newfound Risk Manaed U.S. Sectors Idx 2/3/14 Tactical Sector Newfound U.S. Factor Defensive Eqty Cmp 12/30/14 Tactical Broad Market Stadion Maximum Growth Stratey 6/1/15 Tactical All-Inclusive Optimus Dynamic Equity 1/1/16 Tactical Sector Optimus Equity Rotation 1/1/16 Tactical All-Inclusive Incl. = counted in related stratey * An investment advisory subsidiary of Morninstar, Inc., manaes this portfolio or receives fees for providin investment consultin services to this portfolio sadvisor. These fees are mainly based on portfolio assets under manaement. This portfolio is not sponsored, issued, marketed, or sold by Morninstar,

6 Pae 51 of 60 Optimus Heded Equity 1/1/16 Tactical Sector Stadion Sharpe Sector Rotation 12/31/15 Tactical All-Inclusive BCM Paradim Tactical Factor Selection 6/1/15 Tactical All-Inclusive QID U.S. Eq Sector Stratey 8/3/15 Tactical Sector Paritas US Lare Cap Wealth Stratey 11/2/15 Tactical Sector BCM U.S. Multi-Factor Sector Rotation 1/2/17 Tactical Sector 0.1 WSTCM Sector Select Risk-Manaed Model 11/30/12 Tactical Sector United States Equity Median Hybrid Median Strateic Median Tactical Median Morninstar US Market TR USD United States Fixed Income Wela Own Your Ae (OYA) /1/10 Hybrid All-Inclusive Efficient Market Takin Income-Ar 1/3/06 Hybrid All-Inclusive Efficient Market Takin Income-Moderate 6/1/05 Hybrid All-Inclusive Morninstar ETF Momentum Conservative* 12/29/10 Hybrid Broad Market Efficient Market Takin Income-Consvt 4/3/06 Hybrid All-Inclusive Wela Own Your Ae (OYA)- 80 6/1/09 Hybrid All-Inclusive SinalPoint Moderate Income Point 10/31/08 Hybrid All-Inclusive SinalPoint CU Income Plus 6/30/09 Hybrid All-Inclusive Morninstar ETF Conservative* 12/30/10 Hybrid All-Inclusive SinalPoint Stable Income Point 10/31/08 Hybrid All-Inclusive Capital Advisors Areate Stratey 12/30/11 Hybrid All-Inclusive Green Inv Mt Guardian Tax Free 10/31/01 Hybrid Sector Charles Schwab SMP-ETFs Blend -Cnsrv Inc 12/31/09 Hybrid All-Inclusive Charles Schwab SMP-ETFs Thd-Pty-Csrv Inc 12/31/09 Hybrid All-Inclusive Voya GPMM Income ETF 1/2/13 Hybrid Broad Market Beacon Vantae 3.0 Bond 8/1/16 Hybrid Sector 0.3 PWG Dynamic Fixed Income 1/1/14 Hybrid Sector PWG Dynamic Fixed Income Tax Aware 5/1/14 Hybrid Sector Foy SELECTOR Income 2/1/08 Strateic All-Inclusive Madison ETF Conservative 2/1/10 Strateic Broad Market First Trust Morninstar 20/80* 5/1/09 Strateic Broad Market Members Trust Income ETF 1/3/06 Strateic Broad Market DT Ultra-Conservative Growth & Income 3/31/09 Strateic All-Inclusive Lockwood Asset Allocation Portfolios I 12/31/03 Strateic Broad Market Astor Active Income Composite 2/28/11 Strateic All-Inclusive Morninstar ETF Strateic Mod Income* 4/29/05 Strateic Broad Market Madison ETF Capital Preservation 2/1/10 Strateic Broad Market Caprin Tactical Opportunity ETF 9/30/10 Strateic All-Inclusive Caprin Tactical Muni ETF 9/30/10 Strateic Sector DT Intermediate Fixed Income 9/30/08 Strateic Broad Market Incl. = counted in related stratey * An investment advisory subsidiary of Morninstar, Inc., manaes this portfolio or receives fees for providin investment consultin services to this portfolio sadvisor. These fees are mainly based on portfolio assets under manaement. This portfolio is not sponsored, issued, marketed, or sold by Morninstar,

7 Pae 52 of 60 Transamerica I-Series Portfolio I 1/6/10 Strateic All-Inclusive Madison ETF Income Advantae 2/1/10 Strateic Broad Market NewSquare ETF Tax Exempt Bond 1/4/10 Strateic Sector isectors Domestic Fixed Income 4/1/09 Strateic Sector Caprin Core Plus ETF 9/30/10 Strateic All-Inclusive isectors Capital Preservation Allocation 1/1/10 Strateic All-Inclusive SEI Tax-Manaed ETF Conservative 1/2/14 Strateic All-Inclusive D Tareted Fixed Income /1/16 Strateic All-Inclusive Stadion Master Lon Duration Fix Inc 12/31/15 Strateic Sector Invesco Smart Beta Income SMA WRAP 8/1/16 Strateic Sector 0.0 Clark Naviator Fixed Income TR 12/31/04 Tactical All-Inclusive , WSTCM Credit Select Risk-Manaed Model 12/31/10 Tactical Sector WSTCM Credit Select Risk-Manaed 12/31/10 Tactical Sector Optimus Hih Yield Bull/Bear 3/1/11 Tactical Sector Braver Tactical Hih Income 10/1/96 Tactical Sector Palladiem Diversified Income Model 1/2/12 Tactical All-Inclusive Green Inv Mt Guardian Fix-Inc 7/1/91 Tactical All-Inclusive Stadion Capital Preservation Stratey 4/2/07 Tactical Broad Market Laffer Investments Fixed Income ETF 10/2/06 Tactical All-Inclusive QA Tactical Bond 1/1/10 Tactical All-Inclusive Lonview Capital Fixed Income 9/30/11 Tactical All-Inclusive BCM Income 12/1/09 Tactical All-Inclusive Optimus Tactical Hih Yield 11/1/13 Tactical Sector Quartz Partners Hih Yield Leacy 3/2/15 Tactical Sector Quartz Partners Yield Plus 3/2/15 Tactical All-Inclusive Stadion Tactical Income 10/1/12 Tactical All-Inclusive Hays Advisory Strateic Income 3/6/14 Tactical Sector BCM Paradim Tactical Fixed Income 10/1/15 Tactical All-Inclusive QID FI Stratey 5/27/15 Tactical Sector United States Fixed-Income Median Hybrid Median Strateic Median Tactical Median Morninstar US Core Bd TR USD Incl. = counted in related stratey * An investment advisory subsidiary of Morninstar, Inc., manaes this portfolio or receives fees for providin investment consultin services to this portfolio sadvisor. These fees are mainly based on portfolio assets under manaement. This portfolio is not sponsored, issued, marketed, or sold by Morninstar,

8 Pae 58 of 60 Exhibit 11 ETF Manaed Portfolio by Firm, 31 March 2017 Stratey ($Mil) Quarter- Over-Quarter Growth ($Mil) # Strateies Reported Windhaven Investment Manaement 8, Vanuard Advisers Inc 6, , RiverFront Investment Group, LLC 5, State Street Global Advisors 5, , BlackRock Inc 5, Clark Capital Manaement Group Inc 4, Charles Schwab Investment Advisory Inc 4, Morninstar* 3, Columbia Mmt Investment Advisers, LLC 3,406.7 N/A 3 Stadion Money Manaement,LLC 3, Churchill Manaement Group 2, SEI Trust Company 2, Sae Advisory Services Ltd Co 2, Beaumont Capital Manaement 2, New Frontier Advisors, LLC. 2, Richard Bernstein Advisors LLC 2, Astor Investment Manaement LLC 1, Members Trust Company 1, Couar Global Investments Limited 1, Swan Global Investments, LLC 1, Karpus Investment Manaement 1,211.1 N/A 1 WestEnd Advisors, LLC 1, Efficient Market Advisors, LLC 1, UBS Asset Manaement 1, Nottinham Advisors Inc *Morninstar assets include assets of the followin: Morninstar Investment Manaement LLC and Morninstar Investment Services LLC Exhibit 12 Return Comparison, 31 March Year 3-Year 5-Year 10-Year Global All-Asset Median Hybrid Median Strateic Median Tactical Median Global All-Asset Blended Benchmark Global Balanced Median Hybrid Median Strateic Median Tactical Median Global Balanced Blended Benchmark Global-Equity Median Hybrid Median Strateic Median Tactical Median Morninstar Gbl Mkts NR USD Global Fixed-Income Median Hybrid Median Strateic Median Tactical Median Global Fixed Income Benchmark International-Equity Median Hybrid Median Strateic Median Tactical Median Morninstar Gbl Mkts NR USD United States All-Asset Median United States All Asset Blended Benchmark United States Balanced Median Hybrid Median Strateic Median Tactical Median United States Balanced Blended Benchmark United States Equity Median Hybrid Median Strateic Median Tactical Median Morninstar US Market TR USD United States Fixed-Income Median Hybrid Median Strateic Median Tactical Median Morninstar US Core Bd TR USD

9 Pae 60 of West Washinton Street Chicao, IL USA 2017 Morninstar. All Rihts Reserved. The information, data, analyses, and opinions contained herein: (1) are proprietary to Morninstar, Inc., and its affiliates (collectively, Morninstar ) and/or their content providers; (2) may not be copied or redistributed; (3) are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and (4) are not warranted to be accurate, complete, or timely. For certain types of investment vehicles (e.., separate accounts), Morninstar depends on the investment vehicle itself to provide Morninstar with accurate and complete data. To the extent that one or more of these investment vehicles do not provide Morninstar with data or these data are deficient in any way, the data and statistics provided by Morninstar may be compromised. In addition, because the data contained in Morninstar s database are primarily backward lookin (i.e., they re comprised of historical performance statistics), neither the data nor Morninstar s analysis of them can be relied upon to predict or assess future performance whether of an individual investment,any particular industry sement or the totality of all strateies or investment vehicles in the industry. Unless otherwise specified, the data contained herein represent composite data for those reportin vehicles comprisin the applicable industry sement or the industry as a whole (to the extent included in Morninstar s database). Please note that, as a eneral matter, any return or related statistics that are based upon a limited number of data points are considered satistically suspect and, therefore, may be of limited value. Morninstar is not providin investment advice or actin as an investment advisor to anyone in any jurisdiction with respect to any information, data, analyses or opinions contained herein. All such information, data, analyses and opinions are subject to chane without notice. Neither Morninstar nor its content providers are responsible for any damaes or losses arisin from any use of the content of this report or any information contained in or derived from it. Morninstar and the Morninstar loo are reistered marks of Morninstar, Inc. All other marks are the property of their respective owners.