New research: 10 years of smart beta and the switch is accelerating

New research has revealed ETF adoption among advisers has intensified in the last year, with over 70% reporting greater usage and 65% using two or more smart beta strategies. The depth of usage has also expanded to cover a broader range of asset classes, with Australian equities, global infrastructure, and emerging markets the most popular asset classes among advisers adopting smart beta strategies.

The 2025 VanEck Smart Beta Survey also found more than half of advisers (50.13%) had replaced market cap/passive exposures in client portfolios with smart beta (a 10.77% increase since 2022), and even more advisers (61.27%) had done the same for active funds. Two out of three respondents agreed that smart beta is going to become more prevalent in portfolios and 99% of respondents currently using smart beta ETFs expressed satisfaction.

The survey also revealed that one in four financial advisers invest in crypto as part of their personal portfolio but only 16% are currently invested or considering investing on behalf of clients. Bitcoin remains the most popular digital asset among financial professionals.

On the topic of private markets, 60% of financial advisers currently allocate, with single private market funds and listed vehicles being the most popular way to gain exposure. However, nearly two thirds of respondents are not planning on increasing their allocation to private markets over the next three years.

At least 1 in 2 respondents currently utilise an SMA/Managed Account. Of those currently considering using an SMA or Managed Account, investment track record and credibility were the two most important factors.

Arian Neiron, CEO & Managing Director, VanEck Asia Pacific, said: “One thing is clear from ten years’ worth of survey data: ETFs have become an indispensable tool for advisers targeting cost-efficient outcomes. Penetration is effectively universal at 96.41%. We see smart beta tracking the same arc, with adoption lifting from 36.81% in 2016 to 47.85% in 2025.

“The smart beta switch has been reflected in net flows. In 2023, only two months cleared $500m. Last year, this surged to nine months, with four months crossing the $1 billion threshold for the first time. This year has been softer with the broader markets pullback, however six out of eight months still topped $500m, and July set a new all-time high of $1.1 billion,” said Neiron.

Smart beta ETFs go beyond tracking a market capitalisation index offering investors access to smarter strategies and targeted outcomes, typically for a fraction of the cost of active strategies.

The annual VanEck Australian Smart Beta Survey is the largest survey of its kind in the world, capturing investment trends in the Australian market. This year, marking its 10 year anniversary, the survey attracted 556 responses from financial advisers and brokers working in Australia.