The world of financial portfolios is undergoing a significant transformation, and it's time to delve into the fascinating realm of model portfolios. These pre-designed investment strategies are gaining traction, and their projected growth is nothing short of remarkable.
The Rise of Model Portfolios
Model portfolios, a relatively new concept, have already made a substantial impact on the financial industry. According to Broadridge Financial Solutions, these portfolios accounted for a significant portion of assets held by retail intermediary channels in the first quarter of 2026. The firm's projections indicate a steady and impressive growth trajectory, with the industry expected to reach a staggering $18.6 trillion by 2030.
This growth is not an isolated trend. It aligns with forecasts from other industry leaders, such as Cerulli Associates and Morningstar, highlighting a broader shift towards model-based advisory. The past year has seen an increase in partnerships between TAMPs and asset managers, further fueling the development of custom models that blend public and private assets.
AUM and Market Share
The data speaks volumes. By the end of 2025, the model portfolio industry boasted an impressive $9.3 trillion in assets under management (AUM), reflecting an 18% growth since 2020. Broadridge estimates that this growth will continue, with model assets expected to increase by another 15.4% over the next four years.
When it comes to market share, broker/dealers currently hold the largest portion of model assets, followed by RIAs and wirehouses. Interestingly, the online trading platform channel, accessible to individual investors, holds a significant 9% share. However, the top 10 most popular models are predominantly dominated by broker/dealers, with a strong 83.1% market share.
Growth and Decline
The online channel is the only retail channel experiencing growth in model asset AUM, with a 3.6% increase from the fourth quarter of 2025 to the first quarter of 2026. In contrast, RIAs and wirehouses saw a decline in their model AUM during the same period. This shift highlights the dynamic nature of the industry and the potential for online platforms to disrupt traditional models.
Popular Structures and Asset Allocation
ETFs are increasingly popular among model providers, with 58% of assets held in these vehicles in the first quarter of the year. This is a significant increase from the 54% seen in the first quarter of 2025. Mutual funds, on the other hand, have seen a decline in their share of model assets, dropping from 46% to 42% over the same period.
ETF-only models are gaining ground, accounting for 38% of the marketplace in the first quarter, up from 33.8% just three quarters earlier. Hybrid models maintain a steady presence, while mutual fund-only models continue to decline.
In terms of asset allocation, equities dominate with a 67% share, followed by bonds at 28%. The remaining allocations are spread across mixed assets and other categories. Within the equity assets, growth-focused strategies and aggressive plays are particularly popular, accounting for a significant portion of the allocations. On the fixed-income side, balanced and conservative income strategies are favored.
Final Thoughts
The rise of model portfolios is a fascinating development in the financial industry. It reflects a shift towards more accessible and pre-designed investment strategies, particularly in the online trading space. As the industry continues to evolve, it will be interesting to see how these models adapt and whether they can maintain their growth trajectory. Personally, I believe that the flexibility and customization offered by these models will continue to attract investors, especially in an increasingly digital financial landscape.
