RIAs Favor ETFs Over Mutual Funds
Registered investment advisory (RIA) firms are increasingly favoring exchange-traded funds (ETFs) over mutual funds, leveraging them for diversification and exposure to alternative assets—most notably digital assets—according to AdvizorPro’s Annual 2025 RIA ETF Trends Report.
Analyzing 13F filings from 4,768 RIAs in 2024, the report confirms a broad industry shift toward ETFs across asset classes, driven by their flexibility and cost efficiency. Advisors are also gravitating toward specialized, tax-efficient, and options-based ETF strategies, exemplified by a 124% surge in RIAs adopting products from Neos Funds, a leader in options-based income ETFs.
The ETFs experiencing the steepest percentage growth in allocations spanned multisector bond, derivative income, and growth-oriented equity funds—covering fixed income, small- and large-cap growth, and sector-specific strategies. AdvizorPro attributes this to advisors adapting to volatility and shifting economic conditions.
The categories with the largest increases in RIA participation included muni California intermediate (up 365%), equity hedged (288%), trading leveraged equity (265%), and digital assets (246%), highlighting an appetite for niche, risk-managed, and high-growth options.
Digital assets stood out as a powerhouse in thematic ETF growth. The Grayscale Bitcoin Trust (GBTC) saw an astonishing 1,510% rise in adoption, while the Grayscale Ethereum Trust (ETHE) jumped 1,274%.
AdvizorPro notes, “The massive growth in GBTC and ETHE suggests that regulatory clarity and institutional adoption are accelerating RIA interest in crypto ETFs, making them a more permanent part of portfolios.”
This aligns with findings from Nickel Digital Asset Management’s most recent study, which reported explosive 1,500% growth in crypto-related ETFs among institutional investors, tying the trend to optimism about the SEC’s new leadership. Together, these insights underscore RIAs’ strategic pivot toward ETFs as versatile tools for navigating today’s complex markets.