Model portfolios surge in 2026 as ETFs lead allocations

An industry report tracking U.S. third-party model portfolios through March 2026 found total assets of about $943 billion, a 46% increase from the year-earlier period. The report shows exchange-traded funds accounted for 55.4% of assets in the average model portfolio at that date.

Net inflows into model portfolios totaled $42.6 billion across 2025, a 42% increase from 2024. Those inflows pushed aggregate assets close to the $1 trillion mark and coincided with greater advisor use of pre-built models to set client allocations.

Between March 2021 and March 2026, the average model portfolio increased its ETF allocation by 13.1 percentage points. Mutual funds remained a significant component, representing about 34% of assets on average, while ETFs became the most used underlying investment wrapper. The report attributes the rising ETF share to growth in the ETF market and product innovation.

Private assets are becoming more common in models. About 69% of firms surveyed said they already include private market exposure in their models or plan to add it within three years. Firms identified private credit, private equity and other alternatives as the types of private holdings being added or considered.

The report lists practical reasons advisors and clients use model portfolios: they can speed client onboarding, reduce the time advisors spend selecting individual holdings, align investments with target risk profiles and provide diversification across asset classes. Model-based investing limits direct client control over specific holdings because portfolio managers or the advisory firm make allocation decisions.

The report documents higher ETF allocations, expanding use of private assets and rising net flows into third-party model portfolios through early 2026.