FTSE Russell Convenes · Sep 28, 2026
With Alyson Shupe, Managing Director and Head of Global Product Strategy at Goldman Sachs Asset Management · Ravi Goutam, Managing Director and Head of US & Canada Institutional iShares at BlackRock
Model portfolios, the ready-made allocations that asset managers build for financial advisers, are growing at something like over 20% a year, Ravi Goutam of BlackRock said, and almost 40% to 60% of ETF flows now come from them.
Three to five years ago, institutions used ETFs mainly as a temporary place for cash. Goutam and Alyson Shupe of Goldman Sachs Asset Management said ETFs are now long-term holdings, and the growth is moving to products built for a set outcome, such as extra income or protection against losses.
"So, if you think ETFs are a rocket ship, model portfolios are the jet fuel driving this rocket ship."
Alyson Shupe, Managing Director and Head of Global Product Strategy at Goldman Sachs Asset Management, and Ravi Goutam, Managing Director and Head of US & Canada Institutional iShares at BlackRock, spoke on FTSE Russell Convenes, the index provider's podcast. Goldman recently bought Innovator, a leading maker of ETFs that absorb part of a market fall in exchange for a limit on gains, and Goutam runs institutional sales for iShares in the US and Canada.
The full episode is covered here so you can skip it.
Here are the 7 insights that matter.
Key Takeaways
Institutions have moved from using ETFs to park cash to holding them for the long term
The state of Tennessee lends and trades them tactically, Goutam said
Model portfolios are growing at 4 times the rate of the asset management industry
A model portfolio is on average 3 times the size of a mutual fund and is held 3 times as long
With over 3,000 target-allocation models on offer, simply launching one no longer works
Active ETFs inside models give investors two ways to beat the market: picking securities and setting the allocation
Individual investors, not institutions, drove the growth of options-based ETFs, Shupe said
Outside the US, options-based ETFs are still in their early days, with the strongest demand in Asia
Alternative investments are only about 2% of model portfolios, and private markets may come next
1. ETFs Became Core Holdings
The host opened with the size of the market. He said global ETF assets passed 20 trillion at the end of last year, that BBH estimates they will pass 30 trillion by 2030, and that a PwC study puts the figure above 35 trillion over the same period.
Goutam said institutions used ETFs very differently three to five years ago.
Institutions once used ETFs as a stopgap for cash
"So clients would use ETFs for sort of transitional purposes. They'd use them to equitize cash or bondise cash or compared to them with futures contracts and then say, you know, which one was cheaper or richer." — Ravi Goutam
Equitizing cash means holding an ETF to keep uninvested cash exposed to stocks, or to bonds, until it is put to work.
Now they hold them for years
"And now you can look at the use cases change quite dramatically and they're becoming much more long-term holdings or strategic holdings." — Ravi Goutam
"So, like the state of Tennessee, for example, uses index beta building blocks to generate alpha. They lend ETFs, they tactically trade them." — Ravi Goutam
An ETF for almost any asset
Shupe agreed that institutions had moved from temporary to strategic use. She said the range of what ETFs hold has widened, including digital assets and strategies built on derivatives.
"And really what's also happened is essentially any asset with an economic value associated with it, there's probably an ETF for it these days, whether it's digital assets now." — Alyson Shupe
She said the wider range serves discretionary and institutional portfolio managers as well as individual investors, who reach ETFs through model portfolios or their own brokerage accounts.
