Alternatives ETFs break into the mainstream
Assets under management (AUM) in alternative ETFs globally have reached US$0.28 trillion, according to State Street, with advisers believing they provide a cost-efficient way to access the asset class.
Alternative ETFs are growing, the firm said, but represent only 2 per cent of global AUM currently.
Alternative ETFs include digital assets, gold, defined-outcome, multistrategy, event-driven and those ETFs which follow trends.
The firm’s ETF Impact Report 2025–26 found over three-quarters of advisers say they plan to increase their allocations to alternative ETF strategies over the next 12–18 months.
“Alternative investment ETFs, which package exposures like commodities and digital assets into a more accessible investment wrapper, have experienced record-breaking adoption in the past year. In the same vein, alternative strategy ETFs are finding their way into more portfolios as well – two trajectories we expect will trend further upward.”
Some 80 per cent of advisers said they believed ETFs made alternative investments more accessible for their clients’ portfolios, and 82 per cent said they provided effective downside protection during periods of volatility.
Three-quarters said they presented a cost-effective method of access.
Commenting on adviser usage, executive vice president Anna Paglia said: “Where some advisers see and use alts expressly for the purpose of alpha, others are using alts squarely for risk mitigation or hedging.
“They’re two sides of the same coin, so the divergent reactions of the advisers I mentioned don’t surprise me. As we start to see alts categories crystalise and become more niche in their descriptions, I think we’ll see advisers’ perspectives continue to take shape.
“At the end of the day, I think advisers are wondering the same thing as investors – what’s in it for me? What does this do for me as an adviser and fiduciary? How does this allow me to demonstrate my value in a better way?”
AUTHOR
Laura Dew
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