ETF education in 2026: focus on index rules, client goals

At FundForum earlier this summer, financial advisers and asset managers called for clearer ETF education in 2026, emphasizing how index construction and strategy alignment affect outcomes.

Speakers outlined a shift in the ETF market over the past decade. Product types have proliferated beyond plain-vanilla market-cap trackers to include active management inside ETFs, options overlays, factor exposures, themed strategies, income-focused funds and vehicles that provide access to private assets. Panelists noted that two ETFs with similar labels can behave very differently if they follow different index rules or weighting schemes.

Andrea Acimovic, portfolio strategist at Elston Consulting, warned that the ETF wrapper can hide distinct investment approaches. She observed, “Most advisers know what an ETF is. We’re not in 2010 anymore,” and added that investors can mistake the ticker for the investment idea. “The ticker is the packaging, not the investment thesis,” she said, urging advisers to consider the role a fund plays in meeting client goals.

Arun Subbiah, founder and CEO of Meteor, highlighted index methodology as the main gap in adviser knowledge. He pointed to construction rules, weighting caps and rebalance schedules as mechanics that determine how an ETF behaves over time. “Two ETFs can carry almost the same label and deliver very different exposures underneath,” Subbiah noted, and said the pace of new launches raises the need for closer scrutiny.

Jose Garcia Zarate of Morningstar recommended a sequence for decision-making: match the client objective to a strategy first, then compare funds that implement that strategy. He said, “The index represents the strategy one buys into,” and added that after choosing a strategy advisers should evaluate implementation factors such as liquidity, tracking approach and cost.

Panelists used practical examples to illustrate the issue. One scenario involved a client concerned about concentrated exposure to a single stock, such as Nvidia. Common responses-moving to an S&P 500 equal-weight fund or switching to a sector ETF that excludes technology-do not automatically reduce exposure unless the chosen index and its rebalancing rules produce the intended effect.

Discussion at the event focused on process: define the outcome the client needs, select the index strategy that targets that outcome, and then assess how each ETF implements that index. Speakers advised that defaulting to the lowest-fee option can create mismatches when similarly named funds follow different rules.