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Rating:Which FAs Prefer MFs and SMAs For Active Strats? Not Rated 5.0 Email Routing List Email & Route  Print Print
Wednesday, August 9, 2023

Which FAs Prefer MFs and SMAs For Active Strats?

Reported by Neil Anderson, Managing Editor

ETFs are the top active investment product structure choice for one generation of FAs, while another generation prefers mutual funds and SMAs, according to new research from a consulting firm that supports asset managers.

Thomas "Neil" Bathon
Fuse Research Network
Founder, Partner
Yesterday, the Fuse Research Network team revealed that, per their FUSE Advisor Top Trends for 2023 survey data from April, "there is a clear correlation between an advisor's age and their active/passive strategy preferences for ETFs, mutual funds, and separate accounts." The Boston-based firm's research suggests that the shift to ETFs, especially active ones, is more popular among younger advisors than among their elders.

For active strategies, the Fuse team found that 43 percent of FAs under the age of 45 prefer using ETFs. That makes ETFs younger advisors' plurality choice for active strategies, ahead of both mutual funds (favored by 37 percent) and separately managed accounts (favored by 20 percent).

On the flip side, for the oldest advisors, ETFs ranked last among those three active strategy product structures. Among FAs ages 60 and up, 50 percent prefer using active strategies in mutual funds, versus 29 percent who preferred using such strategies in SMAs and 21 percent who preferred using such strategies in ETFs.

Among advisors in the 45 to 59 age range, mutual funds are still their plurality choice for active strategies: about 42 percent of those FAs prefer mutual funds in this case. Yet about 33 percent of those FAs prefer using ETFs for active strategies, and about 25 percent prefer using SMAs.

Meanwhile, when it comes to passive strategies, ETFs are the dominant choice among all three FA groups, preferred by about 70 percent of the younger two groups and 64 percent of those ages 60 and up. Fewer than 20 percent of the younger two groups prefer using mutual funds for passive strategies, and only about 10 percent of those FAs prefer SMAs for passive. Yet nearly 30 percent of the oldest FAs prefer mutual funds for passive strategies.  

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