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Rating:44 Percent of FAs Plan to Allocate More to These Not Rated 5.0 Email Routing List Email & Route  Print Print
Wednesday, November 22, 2023

44 Percent of FAs Plan to Allocate More to These

Reported by Neil Anderson, Managing Editor

When it comes to where financial advisors will move money next, it looks like active ETFs will continue to gain marketshare in the near futre.

Thomas "Neil" Bathon
Fuse Research Network
Founder, Partner
44 percent of FAs say that they plan to increase their allocations to actively managed ETFs over the next 12 months, according to the results of a recent advisor survey by the folks at Fuse Research Network. And only three percent of FAs say they plan to decrease their active ETF allocations. (The Fuse team notes that nearly 60 percent of asset managers say active ETFs will be a "major focus" for them.)

Other product types that look like they'll be winning FA market share include: separately managed accounts, with 34 percent of advisors expecting to allocate more to SMAs (versus three percent planning to allocate less); passively managed ETFs, with 32 percent expecting to allocate more (vs seven percent planning to allocate less); active mutual funds, with 32 percent expecting to allocate more (vs 16 percent planning to allocate less); and variable annuities, with 21 percent expecting to allocate more (and nine percent planning to allocate less).

On the flip side, it looks like passive mutual funds will be slipping a bit, with only 15 percent of FAs expecting to increase their allocations there and 17 percent expecting to allocate less.

Separately, the Fuse team notes that about 16 percent of the industry's overall active ETF AUM so far comes from mutual fund conversions, mostly by DFA and J.P. Morgan. The Fuse team offers a warning.

"Converting a mediocre mutual fund simply creates a mediocre ETF," the Fuse team writes. "Without access to inorganic funding, a conversion, not unlike a new offering, requires a differentiated strategy, attractive performance, competitive pricing, and a coherent distribution plan." 

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