Institutional allocators in North America are fundamentally reshaping their use of exchange-traded funds. A 2026 study by Crisil Coalition Greenwich and S&P Dow Jones Indices surveying 150 institutional investors reveals that ETFs have evolved far beyond temporary liquidity vehicles. Historically deployed for tactical needs like portfolio completion and manager transitions, ETFs now represent core long-term strategic holdings for over half of surveyed institutions.

Liquidity remains the primary catalyst driving institutional adoption across both equity and fixed-income sleeves, prompting asset owners to systematically replace traditional mutual funds and separately managed accounts. According to the study, 63% of passive ETF assets held by North American institutions are now categorized as strategic long-term allocations. Furthermore, 46% of institutional respondents report holding passive ETFs for periods exceeding two years.

As ETFs solidify their role as foundational portfolio building blocks, institutional due diligence has intensified. Allocators are subjecting index construction to strict scrutiny, prioritizing expense ratios, tracking error, benchmark liquidity, and provider methodology consistency over basic product exposure.

Source: Video - How and Why Institutions Are Evolving Their ETF Usage