A recent MSCI survey of 450 financial advisers across the United States and Europe reveals that 71% intend to increase their allocation to active exchange-traded funds within the next two years. Currently, 87% of the surveyed professionals already utilize active ETFs in their portfolios, while 62% also plan to expand their passive investment holdings.
The transition toward active ETFs often involves replacing existing mutual funds or UCITS holdings. According to the report, 58% of advisers would replace a current fund with an active ETF from the same manager. Furthermore, 85% of fund selectors expressed openness to adopting an ETF share class for strategies they already employ, supported by recent regulatory changes from the SEC.
The study highlights concerns regarding the use of ETFs for private or less liquid assets, with only 16% of respondents viewing this structure as a suitable fit. Key barriers include liquidity mismatches, cited by 62% of advisers, as well as valuation transparency and limited track records. Meanwhile, 68% of participants prioritize liquidity and trading efficiency.
Advisers show a willingness to pay a fee premium for difficult-to-access strategies, with 58% supporting such costs, whereas only 12% are willing to pay extra for core beta products. Additionally, 45% of advisers plan to broaden their equity allocations, with 39% favoring emerging markets over the 24% who prefer developed markets.
