Insights from 325 ETF investors with participants spanning the US, Europe, and Greater China, representing institutional investors, advisors, fund managers, private banks, and wealth managers. Over half manage more than $1B in assets.
A note from our ETF Servicing team
For more than three decades, ETFs have proven their ability to evolve through market cycles, regulatory change, and shifting investor expectations. As an ETF servicing provider operating at the center of this ecosystem, we work alongside issuers every day as they navigate ETF product launches, operational complexity, and global growth ambitions. That vantage point gives us a clear view of how investor behavior is changing and where opportunity is emerging.
Unsurprisingly, ETF adoption continues to climb, especially in active ETFs. In our 13th edition, we wanted to look beyond the year-over-year growth and assess the path forward for the ETF industry:
- What areas of ETF innovation are of interest to investors?
- Where does the hype not match the reality?
- Where is there uncharted opportunity?
Results show that ETF investors are embracing innovation, but with clear expectations around liquidity, transparency, and operational readiness.
Product innovation alone is no longer enough; success depends on aligning investment ideas with operational readiness, distribution realities, and investor expectations. The sections that follow explore new trails for ETFs—and how issuers can position themselves to meet investors where they are headed.
Numbers to know
ETF innovation on the horizon
ETF investors continue to look beyond traditional exposures, particularly where new structures expand access while preserving the core benefits of the ETF wrapper.
Among these emerging structures, interest is especially strong in ETF share classes of mutual funds, which blend operational familiarity with ETF efficiency. A large majority of investors say they would invest in an ETF share class, signalling that hybrid structures may become important for future growth globally.
Private markets ETFs are also firmly on investors’ radar. While historically constrained by liquidity and access, private assets packaged in an ETF structure are increasingly viewed as a viable way to broaden participation. Nearly all investors surveyed would consider allocating to private markets through an ETF, underscoring both appetite and expectation for further development in this space.
What investors want is not novelty for its own sake, but innovation that solves portfolio challenges, whether through defined outcomes, differentiated income, or expanded access.
onut chart and bar chart showing willingness to invest in an ETF share class of a mutual fund. Overall, 82 percent would invest. By region, interest is highest in the United States at 86 percent, followed by Europe at 82 percent and Greater China at 77 percent.
Active investing climbs
Active ETFs continue to gain ground as investors navigate market concentration, valuation concerns, and uncertainty around rates and volatility. Rather than replacing passive strategies, active ETFs are increasingly used as complements that offer flexibility, risk management, and the potential for differentiated outcomes when markets shift. Two thirds of investors now view active management as the more attractive approach over the next 12 months, and nearly all plan to increase their exposure to active ETFs.
For issuers, this momentum comes with higher expectations. Investors are evaluating active ETFs not just on strategy, but on liquidity, tax efficiency, and the quality of issuer support. Service, execution insight, and education increasingly influence which products make it onto—and stay on—investment platforms.
Donut chart showing that 66 percent of respondents prefer active management over passive strategies in the next 12 months.
Considerations for issuers
The ETF investor survey helps us translate investor sentiment into practical insight for issuers each year.
When evaluating ETFs, investors continue to prioritize clear strategy or sector exposure, alongside liquidity, trading costs, and tax efficiency – factors that remain consistent with prior years. Expectations for ETF managers go beyond providing a quality product, with strong demand for value added services such as execution support, portfolio consulting, and differentiated market insights.
And while investors expect to broaden the range of ETF issuers they work with, gaps in education, research tools, asset scale, and platform availability continue to act as meaningful barriers to further ETF adoption.
For over 20 years, BBH has been a leading provider of ETF services for the largest and most established global asset managers as well as new asset managers entering this exciting and growing space.
BBH provides comprehensive accounting, administration, custody, and transfer agency solutions to power our client’s ETF business. Our consultative approach helps guide clients with regulatory, listing, and sales and distribution strategies for an impactful product and successful market entrance.
Do you want to know how BBH can help you? Get in touch with one of our ETF experts.
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