More record-breaking growth expected as investors lean on ETFs to manage global uncertainty: BBH 2025 Global ETF Investor Survey

BOSTON – March 24, 2025 – Brown Brothers Harriman’s 12^th annual Global ETF Investor Survey of institutional investors, fund managers and financial advisors identifies a paradigm shift across the ETF landscape. The report reveals that a remarkable 95% of investors intend to increase their ETF allocations over the next 12 months, an increase from 82% in last year’s survey. This sentiment portends that investors will continue to utilize the flexibility of the ETF wrapper in the face of heightened volatility, by leveraging the wide range of asset classes and strategies that are now available in ETF form.

Additionally, nearly 30% of investors plan to re-allocate from both actively-managed and index-based mutual funds to ETFs, while 33% plan to shift their passive allocation (mutual funds and ETFs) to active ETFs over the next 12 months, underscoring continuing market trends.

The report, released today by Brown Brothers Harriman and Co. (BBH), a leading global ETF custodian and administrator, surveyed a global universe of ETF investors, of which, 51% manage at least $1 billion in assets. Respondents included institutional investors, financial advisors and fund managers from the United States, Europe, and Greater China.

“ETF issuers are innovating to meet the sophisticated investment demands of today’s investor.’” said Tim Huver, Managing Director on the ETF Servicing team at BBH. “Investors are seeking the unique features of ETFs to access an expanded suite of product solutions and talented managers to navigate this market uncertainty.”

Other key findings include:

• Active remains on top: A quarter of investors reported they use active ETFs to access institutional asset managers or strategies, and one-fifth noted they seek to use active ETFs due to their greater transparency. Tax efficiency as compared to mutual funds also ranked highly on investors’ lists.
• Investing with a new wrapper: More than one quarter of investors expect alternative assets to be a growing theme in 2025, with 38% of US investors predicting there will be more interest in alternatives. Three-quarters of allocators expect to increase their investment in crypto-currency-focused ETFs over the next 12 months, with demand the highest in Asia (80%) and the US (76%), in contrast to Europe (59%).
• AI shaping investment decisions: 31% of firms reported they are using AI-driven tools to make investment decisions, with an additional 30% deploying AI for market analysis or research purposes. 26% of respondents indicated their firms rely on financial advisors or fund managers who use AI in their strategies, illustrating the broad application for AI in various contexts within the ETF industry.
• Looking beyond price: As ETFs have moved beyond core beta strategies, cost featured less prominently for investors. In the US, expense ratio finished last in relative importance across all of the ETF attributes we compared, implying that investors recognize the holistic benefits that ETFs can deliver beyond lower costs. Additionally, only 12% of global respondents invest in active ETFs due to lower costs when compared with their mutual fund counterparts, citing access to institutional managers or strategies as their top motivation.
• Differing regional perspectives: Approximately a third of investors in the US and Asia expect that equities will deliver the best performance over the next 12 months, while European investors are looking to fixed income for outperformance (27%). When questioned on the most important selling points for an ETF, US investors pointed to tracking error / divergence as a key driver, while European investors identified the brand’s reputation as crucial, with Asian investors highlighting tax efficiency.
• Market size matters: The majority of investors (81%) will only consider investing in an ETF with more than $50m in AUM; of that, 51% say they require ETFs to have a minimum of more than $100m, highlighting the draw of larger ETFs to avoid concentration risk.
• Sustained momentum: 75% of investors say their ETF allocation buckets have increased over the previous five years, with 19% adding theirs had grown by over 25%. Nearly all investors (95%) intend to increase their ETF allocations over the next 12 months.

About Brown Brothers Harriman

Brown Brothers Harriman (BBH) is a global financial services firm known for premium service and specialist expertise. We have a 200-year track record helping clients innovate and navigate complex financial markets. Our 6,000 employees serve clients and their investments in over 90 markets across BBH’s 18 offices. As a private partnership, we are uniquely built to put clients first and create success that lasts.

BBH Investor Services is a leading provider of asset servicing and operating model solutions to global asset managers and financial institutions. Our asset servicing solutions include custody, global tax services, depositary and trustee, accounting, administration, transfer agency, foreign exchange, and securities lending. Our operating model solutions solve platform, data, and connectivity challenges across open-architecture operating models. We support our clients’ growth, enhance operational efficiency and resiliency, and streamline reporting and oversight.

BBH operates in over 90 markets worldwide from 18 offices. BBH employs approximately 6,000 professionals. 

References to specific types of securities and asset classes are for informative purposes only and are not intended to be and should not be interpreted as recommendations.