Australian adviser ETF adoption hits record high

ETF adoption among Australian advisers has hit record levels and shows no signs of slowing, with allocations surging across all practice types, recent research shows.

The 2025 Betashares/Investment Trends ETF Adviser Report found 73% of advisers now recommend ETFs to clients, with a further 9% planning to start within 12 months.

Advisers directed 25% of all new client flows outside superannuation into ETFs over the past year, suggesting ETFs are fast outpacing traditional managed funds and direct equity positions as the default portfolio building block for Australian advisers.

Why advisers are turning to ETFs

Diversification remains the primary attraction, cited by nearly 8 in 10 advisers as a key advantage.

Cost efficiency is equally critical, with three-quarters pointing to competitive pricing, while two in five value the access ETFs provide to specific overseas markets that would otherwise be difficult or expensive to reach directly.

While index-based ETFs maintain strong penetration among advisers overall, the real story relates to the growing sophistication of ETF selection. Usage of factor and smart-beta strategies, which target specific investment characteristics like momentum, quality or value rather than simply tracking market capitalisation weighted indices, more than doubled from 13% to 30% in a single year. Smart beta strategies are now capturing flows that were traditionally directed to active managers, reflecting a broader reassessment of cost, consistency and performance outcomes by investors and financial advisers.

The trend is particularly pronounced among high net worth focused practices, where smart-beta adoption has also more than doubled.

Implementation gaining momentum

This increasingly sophisticated approach to ETF selection is reflected in how advisers are deploying these tools within client portfolios.

Within managed accounts, the shift toward ETFs is especially pronounced. Advisers allocated 29% of new client flows to ETFs in the last 12 months, with more than one in four increasing their ETF allocation during this period.

US and Australian equities form the backbone of ETF usage across all adviser types, with advisers allocating roughly equal proportions – between 27% and 29% – to Australian equities and international equities, particularly US markets.

Where the ETF industry grows from here

Taken together, the findings point to a sustained structural shift in how advisers access markets and construct portfolios.

Based on the report’s findings, Betashares expects that more than 80% of Australian advisers will use ETFs by the end of 2026, with adoption trending toward near-universal coverage by 2030. More broadly, Betashares continues to forecast that the Australian ETF industry’s funds under management could eclipse $400 billion in 2026 and may hit $500 billion by as soon as 2027.