Wall Street's Model-Portfolio Boom May Hit $11T by 2028

Assets in model portfolios likely reached $5.1 trillion at the end of 2023 as financial advisers increasingly embrace these off-the-shelf investment strategies, according to Broadridge Financial Solutions.

The financial technology company expects such portfolios — created by asset managers and investment platforms by bundling funds into ready-made packages for advisers — to grow to $11.3 trillion by the end of 2028.

That’s more bullish than the projections by BlackRock Inc., which anticipates the niche will become a $10-trillion business by that year.

Exchange-traded funds are seen as a key driver of that growth, according to Broadridge’s Andrew Guillette.

ETFs comprised 51% of model assets at the end of 2023, fueled by an annual growth rate that was nearly twice that of mutual funds.

For ETF issuers, model portfolios are a way to drum up flows into their products as competition in the industry intensifies, with firms such as State Street Global Advisors attempting to carve out a larger slice of a growing pie that is so far dominated by the likes of BlackRock.