Exchange Traded Funds Account Types and Benefits

An ETF wrap is similar to a mutual fund wrap, except the underlying investments are ETFs. (If you are unfamiliar with ETFs or Mutual Fund Wraps, see Introduction to Exchange-Traded Funds and Introduction To Mutual Fund Wraps.) Like mutual fund wraps, ETF wraps are available in two varieties: discretionary and non-discretionary.

Discretionary Account

From an asset allocation perspective, discretionary accounts are similar to lifestyle funds. They offer a variety of pre-selected equity, balanced and fixed-income asset allocation models designed to suit the needs of a wide range of investors. These models typically reflect a range of potential portfolios from 100% equity to 100% fixed income, with balanced models generally varying from 80% equity/20% fixed income to 20% equity/80% fixed income.

Professional money managers oversee the portfolios, selecting investments, monitoring performance and rebalancing to maintain the desired allocation. (To learn more about asset allocation, see Achieving Optimal Asset Allocation.)

http://www.investopedia.com/articles/mutualfund/05/ETFwrap.asp