A summary of the factors has prompted the flow of ETF assets based on the index and mutual funds, and despite the heavy pipeline of new ETFs actively managed, passive strategies will continue to prevail, according to new Cerull Associates.
Among the factors that run the use of index -based funds is the fact that financial advisers continue to shift their focus on planning rather than investment management. This has been facilitated by the increasing popularity of OCIO services, as well as SMA and model portfolios that can be planted with a mix of passive and active strategies.
“While councilors get more elements in their work – buying clients, financial planning, client training – they have a limited time. They are leading with goal -based planning and then curating investment portfolios to pursue it,” said Brendan Powers, a Cerulli director who worked in the research. “They can use these portfolio solutions. With this, we have seen model builders, IBD house offices, tamps and asset managers all include passive products in material ways.”
In general, Cerulli estimates that assets in index -based products, including ETF, mutual funds and direct indexing, exceeded $ 16 trillion since the end of 2024. In addition, advisers with at least 10% of their client's assets invested in ETF are to allocate 49% of the total assets based on the two years of strategies in the two years of strategies in the two years. in 2024.
Some investment strategies are more reduced to index -based products than others. In general, 81% of Cerulli councilors surveyed the use of products based on the index for large lid capital allocations, against only 39% for the US fixed income in the US.
But even on the fixed income side, where active strategies are more widespread, the powers said the use of index -based strategies is increasing.
“It is more difficult to repeat in the index methodology, but fund flux data show that index providers and asset managers are building these products and making them more available to meet the demand,” he said.
We are looking forward, Cerulli projects a 13% annual growth rate for AUM in index -based mutual funds between 2023 and 2028 versus a 6% CAGR for active managed and ETF funds in the same period. They also design a 16% CAGR for SMA directly indexed against 12% for actively managed SMA SMAs.
When selecting indexed ETFs, councilors estimated expenditure ratios as the most important factor (79% for ETFs of capital and 74% for fixed income), followed by performance (68% for both), brand (39% for capital and 31% for fixed income) and then 28% for capital and 28%.
The index based market is dominated by a small part of the players. According to Morningstar direct data, ETFS tracking indices by S&P dow Jones indices (33.8%), FTSE Russell (11.3%) and MSCI (9.5%) are collectively calculated for more than half of total ETF assets. Other index providers, including Nasdaq, Morningsar, Bloomberg and CRSP are also in the mix.
This area of options has implied that councilors are increasingly looking at the index methodology – along with the cost, performance and brand – when they evaluate what funds to use, according to Cerulli. Moreover, councilors are increasingly seeking services in addition to indexes and funds, including consulting services, thought guidance and education, when working with index providers, according to the study.