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Global ETF assets under management have continued to grow in recent years, and ETFs have become one of the core tools for investors worldwide. According to data from research and consultancy firm ETFGI, as of the end of November 2025, global ETF assets rose 30.9%, from US$14.85 trillion at the end of 2024 to US$19.44 trillion, setting a new record once again. Net inflows in 2025 totaled US$2.04 trillion, also an all-time high, marking the 78th consecutive month of net inflows.

As ETF assets continue to reach new highs, ETF product offerings have also evolved rapidly, shifting from single-asset, passive-tracking products toward more diversified, actively managed, and solutions-oriented offerings. Multi-asset ETFs combine multiple asset classes, such as equities, bonds, and commodities, with the aim of delivering portfolio-level diversification, risk management, and sources of return through a single instrument. This article compiles key data and drivers from international markets in recent years, as well as the main product types and directions for innovation.

In recent years, ETFs have ceased to be merely tools for passively tracking indices. According to BBH’s 2025 report, the 2025 Global ETF Investor Survey, overall global investor preference for ETFs has risen markedly, and many investors are using ETFs as a core tool for strategic asset allocation. The survey covered the United States, Europe, and Greater China, and interviewed approximately 325 institutional investors, fund managers, and financial advisers.

The report noted that as many as 96% of respondents said they plan to increase their allocations to ETFs over the next 12 months, a clear increase from 82% in the previous year. When asked which vehicle they would be most likely to choose if they had new capital to deploy, 63% of respondents selected ETFs as their first choice. These findings suggest that ETFs have shifted from being one of many investment tools to becoming the preferred asset-allocation vehicle for most investors, highlighting their broad applicability, liquidity, and convenience.

As investors’ acceptance of ETFs continues to rise, they are no longer confined to traditional passive equity or bond ETFs. Instead, they are showing strong interest in categories such as smart beta strategies, actively managed ETFs, alternative ETFs, and crypto-asset ETFs. Among investors planning to increase their allocations to actively managed ETFs, more than half (53%) expect to add to multi-asset products. This figure indicates that, as the overall ETF market shifts from passive to active strategies, multi-asset ETFs represent a key product category. 

It is also worth noting that, in the Greater China sub-survey, a considerable share of respondents included multi-asset ETFs among the allocation types they are interested in over the next 12 months, indicating that multi-asset ETFs are beginning to emerge as an important option for investors.

Several clear drivers underline investors’ preference for multi-asset ETFs. First, rising uncertainty and volatility in global markets have led both institutions and individual investors to place greater emphasis on risk management, diversification, and portfolio resilience. The structure of multi-asset ETFs enables exposure to a diversified set of assets and allows allocation and rebalancing to be implemented through a single vehicle, meeting investors’ needs to reduce volatility and achieve more stable returns.

In addition, for many financial advisers, fund managers, and institutions, using ETFs as the core of asset allocation helps simplify portfolio construction, lower trading and operating costs, and enhance liquidity and transparency. For these reasons, they tend to incorporate actively managed or strategic ETFs (including multi-asset ETFs) into model portfolios or into standardized portfolios offered by advisers and platforms.

I. Investors are seeking one-stop solutions: in an environment of heightened market volatility and an increasingly diverse set of asset classes, retail investors and small to mid-sized financial advisers often find it difficult to continuously manage portfolio construction, rebalancing, product selection, and cost control. Multi-asset ETFs integrate asset allocation, rebalancing, tax efficiency, and low-cost implementation into a single product, enabling investors to obtain diversified exposure to global equities, bonds, and even alternative assets within one ETF. These “all-in-one” products significantly lower the learning and operational barriers, effectively meeting investors’ needs to simplify the investment process, reduce volatility, and pursue more stable returns.

II. Demand from financial advisers and platforms: wealth management firms worldwide are accelerating the adoption of model portfolios, making ETFs a core tool for building standardized investment portfolios. For advisers, using model portfolios and multi-asset ETFs can reduce portfolio maintenance costs, enhance consistency, and mitigate behavioral biases. International issuers have also launched a range of multi-asset ETFs that can be readily integrated with adviser platforms, retirement accounts, and robo-advisers, thereby streamlining trading and operational processes. These products can reduce rebalancing and trading costs on the adviser side, making them particularly attractive to wealth management institutions that prioritize scale expansion.

III. Integration of active and smart approaches: globally, multi-asset ETFs are no longer limited to traditional “fixed equity-bond allocations.” With the rapid development of active ETFs and smart beta strategies in recent years, many multi-asset ETFs now incorporate active strategies, risk targets, or dynamic asset allocation to enhance their adaptability across different market environments. Multi-asset ETFs that combine active strategies with systematic quantitative models can adjust exposures more effectively and manage volatility across market cycles, appealing to investors seeking solutions that are “low cost yet flexible.” 

According to the Bloomberg database, as of the end of August 2025, the main countries issuing multi-asset ETFs were the United States, Canada, Australia, and South Korea, with their respective shares of assets at approximately 41%, 41%, 7%, and 5%. Other countries have also issued multi-asset ETFs but with a smaller number of products and a smaller asset scale, such as Ireland, Israel, Luxembourg, Germany, the Netherlands, Hong Kong, and Japan. Taiwan also began issuing multi-asset ETFs in 2025. The following summarizes the main product types and development trends of multi-asset ETFs:

I. By Management Approach

Multi-asset ETFs can be categorized into passive management and active management based on their management approach:

1. Passive Multi-Asset ETFs

Passive multi-asset ETFs allocate across different asset classes based on fixed weights or index-based rules. They maintain a targeted risk profile through transparent, low-cost, rules-based rebalancing. The core concept is to follow a predefined index without adjusting positions based on subjective judgment, allowing investors to gain diversified exposure to multiple asset classes through a single ETF. For long-term investors and adviser platforms worldwide, passive multi-asset ETFs are regarded as an important core holding, given their high transparency, low fees, and relatively moderate volatility. 

2. Active Multi-Asset ETFs

Active ETFs have grown rapidly over the past decade. According to ETFGI statistics, as of October 2025, total assets in actively managed ETFs and ETPs worldwide reached a new record of US$1.82 trillion. Active ETFs are managed by professional portfolio managers who actively invest and adjust the portfolio in response to market conditions, with the aim of generating excess returns or achieving specific investment objectives.

In international markets, although most ETFs (including equity, bond, or single-asset-class products) still follow a passive index-tracking approach, in recent years, amid heightened market volatility (such as inflation, interest rate hikes, and geopolitical risks) and rising cross-asset correlations, investors’ demand for flexible, adaptive solutions has increased. Active ETFs combine the advantages of professional active management found in traditional mutual funds with the trading convenience and transparency of ETFs. This has driven the rapid rise of active strategies, and the adoption of active management in multi-asset ETFs has likewise become a global market trend.

II. By Underlying Asset Composition

From the perspective of portfolio constituents and product structure, multi-asset ETFs in international markets are often grouped into several categories, including balanced equity-and-bond ETFs, multi-asset ETFs, and portfolio-structured products (ETFs of ETFs). However, these categories are not mutually exclusive in practice and often overlap significantly. In terms of underlying exposures, traditional balanced equity-and-bond ETFs can be viewed as a specific type of multi-asset ETF. By contrast, an ETF of ETFs reflects a product structure designed to achieve balanced equity-and-bond exposure or broader multi-asset allocation by investing in other ETFs. Accordingly, a single product may simultaneously exhibit features of balanced equity-and-bond exposure, multi-asset allocation, and an ETF-of-ETFs structure. For example, the iShares “A” series ETFs are representative products that incorporate these characteristics.

1. Balanced ETFs (Passive Balanced ETFs)

Balanced ETFs are built on allocations to two core asset classes, equities and bonds. They aim to strike a balance between risk and return and to provide resilient long-term investment benefits. Depending on the management approach, such ETFs may be actively managed or passively tracked, and they adjust the allocation weights between equities and bonds through periodic reviews or clearly predefined rules. Their core value is not to maximize the performance of a single asset class, but to construct a resilient, lower-volatility portfolio across a wide range of market environments. The theoretical basis for equity-bond allocation lies in the low or negative correlation between these two asset classes. Equities are generally regarded as higher-risk assets with growth potential, and their performance is closely linked to corporate profitability and economic expansion. Bonds, by contrast, provide stable interest income, and their price movements are influenced by interest rate fluctuations and inflation expectations, giving them relatively lower-risk characteristics. By combining the two, bond holdings often serve as a hedge and buffer when equities face downward pressure, thereby reducing overall portfolio drawdowns and supporting investor confidence.

From a product design perspective, the most critical feature of balanced equity-and-bond ETFs is their allocation adjustment mechanism. On this basis, mainstream international products can be categorized into fixed-allocation products and dynamic, rules-based products. A representative fixed-allocation product is the iShares Core Aggressive Allocation ETF (AOA). It follows a fixed allocation with periodic rebalancing, with the objective of maintaining long-term weights of approximately 80% equities and 20% bonds. AOA adopts an ETF of ETFs structure. By holding several highly liquid iShares equity and bond ETFs, it simplifies the complexity of asset allocation. When market fluctuations cause the portfolio weights to deviate from the target allocation, the portfolio is automatically rebalanced to maintain the intended risk profile. The iShares A series includes AOA, AOR, AOM, and AOK, each corresponding to a different risk level and allowing investors to choose based on their risk tolerance.

By contrast, dynamic, rules-based products are represented by the Pacer Trendpilot US Large Cap ETF (PTLC), which exemplifies a condition-based, passively managed approach to exposure. Rather than maintaining a fixed allocation, PTLC follows a disciplined, rules-based trend signal and shifts between equities and defensive assets (such as short-term Treasury bills) based on the S&P 500 Index’s position relative to its 200-day moving average. When the equity market is in an uptrend, the portfolio allocates to equities to participate in growth. Once the trend weakens and the rules-based conditions are triggered, it reduces equity exposure and shifts toward defensive assets, enabling investors to achieve effects similar to actively managed drawdown avoidance in a passive, low-cost manner.

From a regulatory perspective, Taiwan has now formally entered a new phase in the development of passive multi-asset ETFs. The passive balanced ETF structures permitted under the current regulatory framework not only allow fixed-allocation designs such as AOA, but also permit conditional allocation adjustment mechanisms such as PTLC. This indicates that Taiwan’s index methodology standards can now accommodate product designs that dynamically adjust asset allocation based on market signals within a rules-based and transparent framework. This development strengthens ETFs’ hedging and risk management functions and further demonstrates that Taiwan’s capital market, in terms of both product diversity and regulatory design, has fully aligned with international trends in passive multi-asset investing.

2. Multi-Asset ETFs

Multi-asset ETFs are ETFs that, within a single investment structure, simultaneously allocate to two or more asset classes with different characteristics, such as equities, bonds, real estate investment trusts (REITs), commodities and their futures, or other derivative financial instruments. Some products may also include alternative investments. The core design concept is to diversify risks arising from the cycle of any single asset class through cross-asset and cross-market allocation, thereby reducing overall portfolio volatility and seeking broader diversification benefits across different economic and market conditions, with the aim of lowering volatility while capturing potential returns under varying market environments.

3. Portfolio-Structured ETFs (ETFs of ETFs)

Portfolio-structured ETFs are not designed to track a single index or a single asset class. Instead, they build a portfolio with diversified asset allocation or investment strategies by investing in multiple underlying ETFs, allowing investors to achieve cross-asset, cross-market, or cross-strategy diversification through a single product.

For issuers, compared with holding individual stocks or bonds directly, an ETF-of-ETFs structure uses highly liquid, large-scale underlying ETFs as building blocks. This reduces the research and operational complexity required for direct investment in individual securities and streamlines product design and management. By adjusting the allocation weights among the underlying constituent ETFs, issuers can respond more efficiently to market changes and enhance the flexibility of portfolio adjustments. In addition, if the constituent ETFs benefit from economies of scale, this can help maintain overall cost competitiveness. Combining ETFs across different asset classes, themes, or regions also supports product positioning and marketing. In some markets, ETFs offer relatively favorable tax efficiency, and this feature may also extend to the operating structure of portfolio-structured (ETF-of-ETFs) products.

From an investor’s perspective, an ETF of ETFs provides the convenience of achieving diversified allocation through a single trade, which can help reduce overall portfolio risk. However, investors should still be aware that performance depends heavily on the results of the underlying constituent ETFs, and market volatility risk remains.

III. By Asset Allocation Objective

Multi-asset ETFs may also be designed around specific investment objectives, with different asset allocation strategies tailored accordingly. The following are several common types of ETFs categorized by their asset allocation objectives:

1. Target Date Funds/ETFs (Target Date Funds/ETFs)

A target date fund/ETF is an asset allocation vehicle that automatically adjusts over time toward a specified target date. Its key feature is that, based on an investor’s expected retirement year (such as 2030 or 2050), it automatically adjusts the asset allocation and gradually reduces the portfolio’s risk level. In general, as the target date approaches, the allocation to equities gradually declines, while the allocation to fixed-income assets, such as bonds, increases. The purpose is to reduce portfolio volatility and risk and to preserve asset stability.

The primary objective of such funds is to simplify the investment process for retirement savings, making them particularly suitable for investors who wish to streamline the management of their retirement portfolios. For many investors who lack the time or expertise to conduct detailed asset allocation, target date funds provide a convenient and automated option. As the retirement date gradually approaches, investors do not need to make complicated adjustments, as the fund will automatically rebalance according to a predetermined strategy to ensure risk control and asset growth. Its core concept is to provide a convenient solution that automatically adjusts risk in line with an investor’s life cycle, focusing on growth in the earlier stages and capital preservation in the later stages.

2. Multi-Asset Income ETFs

A key feature of multi-asset income ETFs is that their portfolios tend to focus on assets that can provide stable cash flows or higher yields. Such assets may include high-dividend equities, high-yield bonds, and real estate investment trusts (REITs). These assets share a common characteristic: they typically provide regular cash flows or distributions and, when held over the long term, can generate income in a relatively stable manner.

The main objective of such funds is to pursue stable current income. They are particularly suitable for investors who wish to receive regular payouts, such as retirees who intend to support living expenses through investment income. Compared with traditional growth-oriented strategies, these funds allocate more capital to income-generating assets, aiming to provide stable cash flows rather than capital appreciation. Accordingly, these ETFs can be an attractive option for investors who are sensitive to market volatility and seek to maintain a stable stream of cash income.

3. Risk-Based/Risk Parity ETFs

Risk-based or risk parity ETFs differ from traditional equity-bond allocation approaches. Their asset allocation does not rely on market capitalization or fixed-weight splits. Instead, they determine allocation weights based on each asset class’s contribution to overall portfolio risk. The core objective of these funds is to equalize the risk contributions of different assets within the overall portfolio, rather than simply pursuing returns.

In practice, risk-based funds adjust allocations based on the volatility of each asset class (that is, its risk). For example, if a particular asset class is more volatile, its weight in the portfolio will be relatively lower; conversely, less volatile assets will receive higher weights. This approach can effectively reduce overall portfolio risk and seeks to achieve a more resilient balance between risk and return.

The objective of risk parity ETFs is to deliver more resilient risk-adjusted returns, making them particularly suitable for investors with higher requirements for risk control. Through this approach, the portfolio can maintain relatively stable returns even during periods of market volatility, thereby reducing overall risk.

IV. International Development Trends

The development of ETFs in international markets has evolved from passive tracking of a single asset into increasingly sophisticated multi-asset allocation. In 1993, the first ETF in the United States, the SPDR S&P 500 ETF (SPY), was launched. It successfully demonstrated the feasibility of packaging the S&P 500 Index, a basket of securities, into a tradable instrument, and established the advantages of low costs, high liquidity, and tax efficiency. Subsequently, in the early 2000s, issuers began exploring further segmentation and expansion across asset classes. Real estate ETFs (REIT ETFs) and bond ETFs were introduced in succession, marking an important step in extending investment tools from equities to the fixed-income space. The launch of the physical gold ETF (GLD) in 2004, followed by the introduction of commodity and futures ETFs, further expanded the market’s investment toolkit and laid a solid foundation for cross-asset allocation. Although products during this period still mainly focused on single asset classes, they created the conditions for the subsequent development of multi-asset portfolios that integrate across asset classes.

The first truly milestone multi-asset ETFs formally emerged in 2008. In November of that year, BlackRock’s iShares launched its A series of balanced equity-and-bond ETFs, including the aggressive AOA, the growth-oriented AOR, the moderate AOM, and the conservative AOK. This product series uses an ETF of ETFs structure to allocate weights across global equity and bond markets in accordance with the S&P Target Risk Indices. It successfully packaged asset allocation functions that had previously been achievable only through more complex mutual funds into a single listed instrument that is low cost and highly liquid, ushering in a new era of passive multi-asset allocation.

From the perspective of issuance by region, the United States remains the leading market for multi-asset ETF development, followed by several other jurisdictions, including Canada, South Korea, the United Kingdom, Australia, and Hong Kong, all of which have opened their markets to this type of ETF. As of 2025, the US market accounts for approximately 70% of total global ETF assets under management. Its well-established regulatory framework and exceptional market depth have attracted global asset management leaders, including Vanguard and State Street, to continue launching innovative products. The European market, particularly UCITS-structured products domiciled in Ireland and Luxembourg, has followed closely behind. Given its more stringent diversification requirements, multi-asset ETFs in Europe have demonstrated notable strengths in diversified income strategies and alternative asset allocation. In recent years, Asian markets have experienced explosive growth. In particular, Taiwan formally opened the market to passive balanced ETFs at the end of 2024, and the first batch of domestically issued multi-asset ETFs were listed in 2025, indicating that ETF product offerings in the Asia-Pacific region are also becoming increasingly diversified.

The evolution of multi-asset ETFs in international markets has undergone a qualitative shift from “static weighting” to “active flexibility.” The first stage was characterized by fixed-allocation portfolios represented by the iShares A series, with the core objective of establishing a stable long-term risk model. In the second stage, as market volatility intensified, multi-asset ETFs further evolved into strategies such as rules-driven conditional asset allocation, risk parity approaches, and multi-asset income ETFs focused on enhancing cash flows, in order to navigate a high-volatility, low-interest-rate environment. By 2025, international markets had entered a third stage marked by the rapid growth of active ETFs. Among ETFs newly listed worldwide in 2025, the share of active products continued to rise, and the number of multi-asset products adopting active strategies increased substantially. Within established investment guidelines, portfolio managers can reallocate assets in real time in response to macroeconomic factors such as geopolitics, high inflation, and trends in the AI industry. This enables multi-asset ETFs to evolve from simple passive diversification into comprehensive strategic tools capable of addressing modern financial risks with greater precision.

Multi-asset ETFs have become one of the key growth areas in the global ETF market in recent years. Their core value lies in integrating asset allocation, risk management, and investment efficiency into a single tradable instrument, meeting investors’ demand for long-term resilient returns and diversified risk exposure. As the global financial environment experiences high inflation, faster interest rate cycles, and heightened geopolitical uncertainty, multi-asset ETFs – with their transparent, low-cost, and disciplined allocation features – have gradually shifted from supplementary products to key portfolio holdings, while continuing to expand in both scale and strategic diversity across major international markets.

In line with this global trend, Taiwan’s ETF market has also demonstrated strong growth momentum in recent years. Not only have the number of products and assets under management expanded rapidly, but Taiwan’s overall ETF market scale has risen to become the third largest in the Asia-Pacific region, indicating that Taiwan’s capital market has established a solid foundation for accommodating internationally oriented asset allocation products. According to statistics from the Securities Investment Trust & Consulting Association, in terms of mutual funds, as of the end of November 2025, domestic multi-asset mutual funds accounted for approximately 19% of all domestic mutual funds, while offshore multi-asset mutual funds accounted for approximately 26% of all offshore mutual funds. This indicates that investors in Taiwan already have a certain level of demand for multi-asset products.

In response to market developments and investor demand, the competent authority formally opened the market to passive balanced ETFs at the end of 2024, expanding Taiwan’s range of multi-asset ETF offerings and providing more diversified investment tools. Related new products were launched in 2025, marking Taiwan’s ETF market’s formal entry into a new, asset-allocation-oriented phase.

Compared with traditional single-asset ETFs, passive multi-asset ETFs help investors achieve long-term asset allocation objectives more simply through predefined equity-bond allocation frameworks or risk control mechanisms. They are particularly suitable for medium- to long-term investors who seek diversification, investment discipline, and investment efficiency. The introduction of such products not only addresses the longstanding gap in Taiwan’s ETF market with respect to allocation-oriented tools, but also helps guide investor behavior away from short-term trading and gradually toward an investment culture centered on asset allocation and risk management, thereby further enhancing the market’s overall stability and maturity.

However, investors should still be mindful that, although multi-asset ETFs are designed with the aim of diversifying risk, they are not risk-free investment instruments. Investment outcomes depend heavily on the asset allocation framework, the design of the rules, and how well they fit prevailing market conditions. When equities and bonds exhibit a high positive correlation over a given period, or when both face downward price pressure at the same time, the diversification benefit may be significantly reduced. In addition, products with fixed allocations may experience short-term volatility during rapid market reversals, as their rebalancing mechanisms can lag. By contrast, multi-asset ETFs that rely on conditional or rules-based allocation must bear allocation risk arising from model assumptions failing or signals being misread.

Accordingly, when using multi-asset ETFs for asset allocation, investors should carefully review the prospectus, fully understand the product’s design rationale, allocation rules, and potential limitations, and prudently assess their own risk tolerance and investment horizon. Investors should avoid viewing multi-asset ETFs as an “automated allocation tool” that can fully substitute for their own investment judgment. Only by clearly distinguishing the differences among multi-asset ETFs in terms of allocation approach, sources of risk, and appropriate market conditions can investors enable them to truly fulfill their roles in long-term asset allocation and risk management.

Looking ahead, under the policy guidance of the competent authority, the Taiwan Stock Exchange will continue to serve as a key platform for advancing capital market frameworks and product innovation. It will actively explore new types of ETFs and related products that align with market development trends and, in the process of regulatory design, broadly gather input from industry participants and investors’ practical needs. It will also continue to refine existing product structures and trading mechanisms to balance market efficiency, investor protection, and long-term developmental stability.

As ETF offerings become increasingly diversified and regulatory constraints are gradually eased, Taiwan’s ETF market has continued to build scale and depth, creating favorable opportunities for international asset managers to enter the Asian market. In 2025, several global asset management firms joined Taiwan’s ETF market for the first time. Their participation not only helps attract global capital and enhance market liquidity but also promotes cross-border product collaboration, the exchange of regulatory and market experience, and the application of financial technology, thereby further strengthening the overall capabilities and international visibility of Taiwan’s asset management industry. Through the joint efforts of the competent authority and market participants, Taiwan’s capital market is expected to continue moving toward greater openness and competitiveness, steadily strengthening its position as a major asset management hub in Asia.

References:

• ETFGI（2025） ETFGI reports assets invested in the global ETFs industry reached a new record.
• Brown Brothers Harriman (BBH)（2025） 2025 Global ETF Investor Survey.
• BlackRock（2024） Perspectives on Active ETFs and Multi-Asset Innovation.
• Morningstar（2024–2025） ETF Market Trends and Investor Behavior Outlook.
• State Street Global Advisors / SPDR ETFs（2025） ETF Market Outlook 2025.
• Ernst & Young (EY)（2025） How ETF trends are shaping market growth and innovation for 2025.
• Fidelity Investments（2024） Fidelity® Unveils New ETF Model Portfolios for Wealth Management Firms.