June 30, 2026 — Institutional investors across North America are adding exchange-traded funds to their portfolios as both a source of long-term strategic investment exposures and a tool for executing tactical portfolio functions.

More than half of North American institutions now employ ETFs in their investment portfolios, and more than half of institutions that have not yet adopted the funds are actively considering introducing ETFs, according to a new study from Crisil Coalition Greenwich, sponsored by S&P Down Jones Indices.

The 150 U.S. and Canadian institutional investors participating in the study say they are increasing their use of ETFs in both equities and fixed income to access a range of benefits such as enhanced liquidity, ease of use, and quick access to exposures across asset classes.

“Many institutions originally started employing ETFs to execute tactical tasks like manager transitions, portfolio completion, and liquidity management,” says Susan Gould, Relationship Manager at Crisil Coalition Greenwich and author of ETFs in Institutional Portfolios: The New Normal. “During this process, institutions discovered that ETFs’ liquidity, flexibility, and quick exposures made them effective tools across a broader range of applications.”

Strategic Exposures for Passive Strategies
Institutions’ embrace of ETFs as a tool for portfolio management unfolded in step with another trend in investing: the rise of passive strategies. 
Traditionally, institutions have used a mix of institutional mandates, separately managed accounts, collective investment trusts, and index mutual funds as their primary vehicles to seek passive exposures and market beta.

However, as institutions shifted assets from active to passive strategies in large-cap equities and other highly liquid and increasingly commoditized asset classes, they discovered that ETFs could work well as a vehicle for taking on long-term strategic exposure. Today, a growing number of institutions are adopting ETFs for passive exposures, with nearly 90% of institutional ETF users employing passive equity ETFs in their portfolios and 54% using passive ETFs in fixed income.

“Currently, most ETFs in institutional portfolios are passive and categorized as strategic assets, as opposed to tactical,” says Susan Gould.

More Growth Expected 
The ability for institutions to use ETFs as both a tool for tactical portfolio functions and as a means of taking on long-term strategic exposures is leading to increased adoption and expanding allocations. Today, 56% of U.S. institutions and 48% of Canadian institutions employ ETFs. Across North America, more than a third of institutions plan to increase allocations to ETFs in the next 12 months.

Despite the widespread use of ETFs in index strategies, not all this new usage will involve passive ETFs. More than 1 in 5 institutions overall—and roughly 30% of North American pension funds and insurance companies—plan to expand allocations to active ETFs.

ETFs in Institutional Portfolios: The New Normal presents the complete results of the recent study. The report tracks usage of active and passive ETFs across asset classes by North American institutions, analyzes the primary ETF use-cases in institutional portfolios and examines the key reasons institutions give for adopting ETFs. Finally, the report examines obstacles to additional institutional use and discusses innovations or changes that could stimulate institutional demand for ETFs.