Australian advisers are increasing their use of active ETFs, looking beyond their home market for growth and weighing how far the ETF structure can stretch, according to MSCI’s ETF Intelligence Report 2026.
The findings are based on a survey of 75 investment professionals in Australia and form part of a broader MSCI study of advisers across Australia, the United States and Europe.
The vast majority ( 95% ) of Australian advisers and investment decision-makers currently use active ETFs, and 73% expect to increase that use over the next two years.
Advisers already allocate an average 50/50 split between Australian and international equities, and 67% plan to increase that international allocation further, with 40% expecting to focus more on emerging markets.
Currency exposure is treated as an active decision rather than a fixed one: 68% prefer a hedged or dynamic hedging approach when investing offshore, and 45% vary that approach with market conditions.
Room for product development
That tilt further offshore is also shaping demand for choice. Multi-asset strategies rank highest, with 51% of advisers preferring active ETFs, followed by emerging markets ( 49% ) and thematic strategies ( 47% ), yet actual active ETF use remains far lower at 32% for multi-asset strategies and 39% for thematic strategies, pointing to room for further product development.
Advisers are more cautious about how far the ETF structure can stretch. While 51% are open to accessing private or less-liquid assets through an ETF, only 17% are very open, with 59% citing liquidity mismatch as the main concern. Tokenization drew a warmer reception, with 59% of those familiar with it seeing value in tokenized ETF structures, a higher share than among US and European advisers.
Selecting between similar ETFs comes down to more than price. Ninety-two percent primarily use, or favour, a small set of preferred ETF managers, and the index provider behind a fund influences the final choice for 80% of advisers at least some of the time.
More than half ( 52% ) would pay a premium for difficult-to-access exposures, and fees, while still the most commonly cited selection criteria ( 59% ), do not decide the outcome alone, according to the survey.
“ETFs are firmly established in the Australian investment toolkit, and their role is likely to keep growing. Active ETFs are an important part of that growth story, bringing a wider range of investment strategies and exposures into the structure,” says Shane Edwards, Sydney-based head of Asia-Pacific at MSCI.
“Looking closely at where demand is building, where advisers see room to broaden the toolkit and how investor needs are changing can bring greater clarity to where the market may develop next.”
Passive ETFs, managed funds
Growth in active ETFs is not coming at the expense of managed funds: 61% also expect to increase their use of passive ETFs and 55% their use of managed funds, a pattern that differs from the shift away from managed funds seen among US and European peers.
Yet that coexistence does not eliminate competition at the product level: 53% say a new active ETF allocation would most likely come from an existing managed fund, compared with 25% from another ETF and 21% from a new allocation, and 62% would consider moving a managed fund holding to an ETF share class of the same strategy if offered by the manager.
"Passive ETFs remain the foundation of most adviser portfolios, but active ETFs are increasingly becoming mainstream. What we are seeing is a shift from whether advisers will use active ETFs to where the structure delivers the most value,” says Jana Haines, global head of index at MSCI.
"As the ETF market enters a more mature phase, advisers are also asking harder questions about the product’s fit. The opportunity lies not just in providing more choice, but in knowing where the structure adds value, where its limits lie and what it takes to earn a place in the portfolio.”
