Institutional ETF Adoption Doubles in Five Years, Driven by Liquidity and Efficiency

Event summary

  • Institutional asset owners in North America have doubled their ETF usage over the past five years, with assets reaching approximately $337B in 2025.
  • ETF holdings grew at a 14.4% five-year compound annual growth rate (CAGR) from 2020 to 2025, outpacing the broader U.S. institutional market's 5% CAGR.
  • Nearly half of institutional ETF users expect to increase their allocations over the next 24 months, while 16% of non-users plan to begin using ETFs.
  • Key drivers for adoption include improved liquidity, operational efficiency, and access to unique investment strategies.

The big picture

The rapid adoption of ETFs by institutional investors highlights a broader industry shift towards liquidity, efficiency, and access to previously hard-to-reach strategies. With $337B in ETF assets under management in 2025, the trend underscores the growing importance of ETFs as core portfolio tools. This shift is driven by the need for operational efficiency, lower fees, and the ability to deploy capital quickly in diverse products.

What we're watching

Active ETF Growth
The pace at which institutional investors adopt active ETFs, particularly in fixed-income, as they approach three- and five-year track records.
Innovative Product Development
How asset owners partner with ETF issuers to develop new, innovative products, such as those accessing cryptocurrency, bank loans, or emerging markets.
Strategic Allocation Shifts
Whether institutional investors will continue to expand ETF use across both strategic and operational applications, building core positions and making strategic adjustments.

Related topics

ETFs