Advisers Shift Toward Active ETFs as Mutual Funds Lose Ground

For asset managers, the important number in MSCI’s latest ETF survey is not simply that active products are gaining traction. It is where the money may come from: 58% of advisers said a new active ETF from a manager they already use would most likely replace an existing mutual fund or UCITS holding.

That finding gives the active ETF push a sharper commercial edge. The ETF wrapper is not merely attracting new allocations. It is becoming a vehicle for migrating established strategies into a structure that offers intraday trading, portfolio transparency and, in many cases, greater tax flexibility for investors.

MSCI surveyed 450 advisers across the United States and Europe for its 2026 ETF Intelligence Survey. Some 87% already invest in active ETFs, while 71% expect to increase their use over the next two years. Passive ETFs are not being abandoned. Sixty-two percent also plan to raise passive allocations, suggesting the contest is less active versus passive than a broader expansion of ETF-based portfolio construction.

The survey points to a battle over product design as much as investment style. Half of respondents said they would likely switch to an active ETF version of a strategy they already own, while 85% of fund selectors were open to an ETF share class for the same strategy. That could favor large asset managers with established distribution networks and recognizable fund lineups, since they can shift existing products without asking advisers to change managers.

Demand is also moving beyond home-market exposure. Forty-five percent of respondents expect to broaden equity allocations internationally over the next two years, with emerging markets drawing more interest than developed markets among those planning the shift. Thematic and megatrend ETFs registered the strongest demand at 47%.

Still, advisers are not treating the ETF label as a free pass. Sixty-eight percent ranked liquidity and trading efficiency among their top considerations, and 58% said they would pay more for a difficult-to-access strategy, compared with only 12% for core beta. Private-market ETFs remain a harder sell: nearly half are open to using ETFs for less-liquid assets, but just 16% consider private markets a good fit because of liquidity mismatches, valuation opacity and limited track records.

For MSCI (NYSE: MSCI), the findings reinforce the value of benchmarks in an increasingly crowded market. Advisers are using indexes not only to track passive exposures, but also to judge what an active strategy is designed to do and whether its fees are justified.