Advisors Increase Use of Active ETFs, Decrease Mutual Fund Allocation

August 22, 2023

Latest Cogent Syndicated Advisor Brandscape® report from Escalent shows leading brands in active ETF consideration

A new Cogent Syndicated report from Escalent shows fee-conscious advisors are increasingly turning to Exchange-Traded Funds (ETFs) and decreasing their allocations to mutual funds. The proportion of advisors selling ETFs reaches an all-time high at 91%, nearly equivalent to the percentage of advisors tapping mutual funds (94%).

The study also finds a large percentage of ETF users plan to increase their use of active ETFs with 48% planning to grow their use in client portfolios over the next year. On the other hand, 43% of mutual fund producers plan to decrease their mutual fund use over the next two years.

“After several bank collapses, fear of an economic downturn and one of the worst years in the market, advisors and their clients continue to feel uneasy with many worrying economic conditions will worsen,” said Meredith Lloyd Rice, vice president in Escalent’s Cogent Syndicated division. “To make the dollar go further, advisors are increasingly turning to ETFs and decreasing allocations to mutual funds to reduce fees and potentially make higher earnings.”

These are the latest findings of Escalent’s Advisor Brandscape® report, which measures the impact of brand and loyalty on revenue in the advisor marketplace.

For fifteen years, Cogent Syndicated has provided detailed assessments of leading mutual fund and ETF providers. This year’s research found Capital Group moved up from 17th to 7th place in consideration for active ETFs due to a significant increase in its rating from 4% to 11%. J.P. Morgan Asset Management moved up two spots from last year and into eighth place, earning consideration for its active ETFs from 10% of all ETF producers.

“We see a profound disconnect between perception and reality of who is an active ETF market leader,” said Rice. “There’s a halo effect for ETF category leaders who are primarily index providers that don’t account for much of active ETF flows. While those on the active ETF sales leaderboard have been making progress, there’s an opportunity for them to grow their leadership position in the active ETF category and move up in the ranks.”

“As asset managers face disruption and fee compression, it’s more important than ever for firms to articulate a vision for how they deliver value to clients,” continues Rice. “While the value proposition and pathway to execution will vary by firm, using thought leadership, promoting partnership-related attributes and exceptional service, or providing value through merger and acquisition activity to achieve greater scale, all firms have a great opportunity to articulate their goals and pursue them based on their place in the market.”

Advisor Brandscape results will be featured in an upcoming webinar facilitated by Meredith Rice and William Trout. For more information visit the registration page.

About Advisor Brandscape®

Cogent Syndicated conducted an online survey with 1,541 registered financial advisors from January to March of 2023. In order to qualify, respondents were required to have an active book of business of at least $5 million and offer investment advice or planning services to individual investors on a fee or transactional basis. Cogent sets quota targets and weights the data to be representative of the overall advisor universe using the Discovery Data Financial Services Industry database as a sample source. Escalent will supply the exact wording of any survey question upon request.

To learn more about the full report, click below.


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