Beyond cost: active ETFs take a central role in investors’ portfolio
Active ETFs are becoming core portfolio tools and not just because of their lower cost. Schroders’ annual investor survey shows how active ETFs are evolving beyond the wrapper story.
Active ETFs are quickly moving from a niche allocation to becoming a key part of investors’ toolkit. This year’s Schroders Global Investor Insights Survey shows investors increasingly want active management and the operational advantages of the ETF wrapper, and don’t just see it as a low-cost alternative to mutual funds.
Find out more about investors' current concerns and how they are responding: visit Schroders Global Investor Insight Survey 2026
More than nine in ten (94%) saying they see a role for active ETFs in portfolios (and only 6% saying the opposite), the debate is now shifting from whether to use them to how to use them effectively.
That matters in today’s market backdrop. With more volatility and continuous uncertainty, investors are looking for ways to invest quickly, easily monitor and adjust positions, while still benefiting from active decision making.
Cost still leads, but it’s no longer the whole story
When investors are asked what matters most when considering an active ETF, cost continues to dominate the headlines. Lower costs relative to mutual funds is the top-ranked benefit, cited by 70% of respondents (ranked in their top three reasons).
Figure 1: The top considerations when choosing an active ETF
Source: Schroders Global Investor Insights Survey 2026. The survey question was “When considering an active ETF, which of the following benefits are most important to you?” and respondents were asked to rank their top three reasons.
But investors are not just looking for “active at a cheaper price”, arguably what active ETFs’ early growth was framed around. Half of the respondents highlight active ETFs’ intraday liquidity and the flexibility to trade at market prices, while 43% point to improved secondary‑market liquidity versus mutual funds. This reflects the fact that ETFs can be bought and sold on exchanges throughout the day, often with market makers supporting trading. Mutual funds typically deal only once a day, which can limit flexibility when investors need to move quickly.
Active ETFs' greater portfolio transparency is another key benefit for 41% of the surveyed, while 40% also value access to active strategies not available as a mutual fund.
How are investors using active ETFs?
The survey suggests investors are using active ETFs as flexible building blocks in portfolio construction, enabling them to express views, access differentiated exposures and complement core holdings, while still trading efficiently.
Figure 2: The key roles of active ETFs in portfolios
Source: Schroders Global Investor Insights Survey 2026. The survey question was “In which portfolio roles would you most value active ETFs?" and respondents were asked to select up to three answers.
This shows up in two main ways. First, active ETFs are widely used for diversification (49%) and tactical or satellite positioning (42%). Second, they are used for practical portfolio jobs such as risk management (33%) and transition management (29%) - effectively parking assets while changing allocations.
Tom Stephens, Schroders’ Head of ETFs said: “The beauty of ETFs lies in the simplicity of the vehicle and how easily you can use them both strategically and tactically. Strategically, that can mean core equity or fixed income exposure; tactically, it might be expressing a view on duration, thematics or sectors.
“And it’s not just about cost: being able to trade intraday across different platforms means you can make changes quickly, with more transparency and operational efficiency than many other vehicles. This really helps when you’re trying to deliver specific portfolio outcomes like diversification or risk management.”
Active ETFs for specialist, harder-to-access markets
The survey also indicates that demand for active ETFs isn’t uniform across all exposures.
Investors value active expertise in areas where markets may be less researched, less efficient, or structurally more complex. These include small and mid-cap equities (37%), emerging market equities (35%), thematic or sector strategies (34%), and liquid alternatives / hedge-fund-style strategies (23%).
It’s clear investors want active ETFs to combine trading convenience with distinctive active outcomes, especially where index exposures can be less precise or other vehicles could be less practical.
Addressing the concerns: transparency and track record still matter
While momentum for active ETFs is strong, the survey highlights adoption barriers that are largely down to the fund manager, rather than the structure of the vehicle itself.
For 34% of investors, limited track record and uncertainty around performance relative to traditional active funds are equally concerning. On a similar level, lack of transparency around the active process (31%) is another key challenge, followed by complexity associated with derivative-based implementations and capacity or trading liquidity (30%).
These concerns suggest the next phase of active ETF growth will depend on managers demonstrating a clear investment process and showing how the strategy is implemented and managed within the ETF structure, so investors can understand and monitor it over time.
Témy