Financial Advisors Tilt Toward Active ETFs

Financial Advisors Tilt Toward Active ETFs

Investors are expecting more from ETF issuers, Brown Brothers Harriman survey finds.

Wealth Management Editor
Reviewed by: Staff
Edited by: Ron Day

Financial advisors and institutional investors are zeroing in on actively-managed ETFs as they continue to migrate away from mutual funds, according to a new report from Brown Brothers Harriman and Co.

Among the findings from the 2024 Global ETF Investor Survey is a growing appetite for active ETFs, with 78% of survey respondents expressing plans to increase their overall portfolio exposure to active exchange-traded funds in the next 12 months.

Also, 80% of ETF investors said they have purchased at least one active ETF in the past 12 months, according to the 11th installation of the survey from the New York-based private bank that operates an ETF custodian and administrator.

For ETF issuers and the industry in general, the report based on a survey of 325 ETF investors in the United States, Europe and so-called Greater China (generally considered as China, Hong Kong and Taiwan) it is a positive sign for the future of the $12.7 trillion industry.

Active ETFs to the Rescue

Globally, 82% of investors said they will be increasing allocations to ETFs, while 97% of U.S. investors said they plan to increase usage.

Also, 74% of investors are planning to expand beyond their current ETF issuers and product lines.

Meanwhile, the mutual fund industry continues to take it on the chin as 48% of respondents list index mutual funds as the top source from which they have reallocated capital to invest in active ETFs.

John Hooson, a managing director who works on the ETF project at Brown Brothers, cited a growing trend toward increased diversification into fixed-income, defined outcome and alternative investment strategies.

“Folks are looking for that downside protection,” he said.

The study showed that 70% of ETF investors anticipate increased exposure to fixed income ETFs over the next 12 months, including high yield, non-U.S. sovereign debt and mortgage-backed securities ETFs.

As the ETF industry continues to grow and mature, Hooson said financial advisors and institutional investors are paying more attention to the ETF issuers and looking beyond just a specific fund.

“The brand and the experience are becoming part of the buying decision and the ongoing due diligence,” he said. “Issuers should be thinking about how they are connecting and engaging with investors.”

The survey found that 99% of respondents are relying on the ETF issuer in some way.

When asked to rank importance when selecting an ETF, the issuer topped the list ahead of performance, tax efficiency, tracking error, expense ratio, index methodology, trading spreads and trading volume.

In terms of cryptocurrency ETFs, which have become the hottest area of the ETF space this year, they ranked first as the topic investors are most bullish on and also ranked first as the topic the market is more bearish on than it should be.

“There is an interestingly high conviction from folks for crypto and that others are missing the crypto bandwagon,” Hooson said.

Jeff Benjamin is the wealth management editor at, responsible for coverage related to the financial planning industry. This includes writing, hosting podcasts, webinars, video interviews and presenting at in-person events.

Jeff is a veteran journalist with more than 30 years’ experience covering the financial markets. He has won more than two dozen national and regional awards for his reporting. He most recently worked as a senior columnist at InvestmentNews where he wrote about investment products and strategies, as well as the broader financial planning industry. Prior to that, Jeff worked as an analyst at Cerulli Associates where he researched and wrote reports on the alternative investments industry. Jeff also worked as a money management reporter at Dow Jones Newswires, where he covered the mutual fund industry.

Based in North Carolina, Jeff is a former Marine and has a bachelor’s degree in journalism from Central Michigan University.