2026 US Model Portfolio Landscape

• Exchange-traded funds have become the vehicle of choice in model portfolios. 
• ETFs occupied 55% of model allocations on average as of March 2026, up from 43% five years before. 
• ETFs’ intraday liquidity and lower fees make them more appealing than mutual funds for financial advisors implementing model portfolios. 
• Custom model portfolio assets continue to grow as advisors increasingly work with model providers to build more-tailored portfolios that better align with their clients’ unique needs and circumstances. 
• Custom model assets totaled USD 258 billion at the end of March 2026, a 40% gain on the previous year. 
• Key mechanics of customization include fund substitutions, adding/subtracting asset classes, and strategic asset-allocation tweaks. 
• Model portfolios maintain their fee advantage over mutual funds. As of year-end 2025, model portfolios’ average 0.35% asset-weighted fee was lower than the average unbundled mutual fund’s 0.61%. 
• Allocation models, which constitute much of the model portfolio universe, were about 0.25 percentage points cheaper, on average, versus the lowest-cost mutual funds in the five US-focused and five global-allocation Morningstar Categories. Model fees in this study do not include the advisor’s fee.

Source: Morningstar Direct, survey data, and author's calculations. Data as of March 31, 2026.

This report focuses on model portfolios offered by asset managers or investment strategists for use as investment blueprints for financial advisors. It does not include home office models offered by wirehouses or broker/dealers since they are limited to those firms’ advisors.  

• Advisors can implement models via third-party platforms or trade themselves following a paper version of the model. 
• The table below shows a sample of platforms offering model portfolios. Services and offerings may differ among providers in each channel, and some platforms may not fit cleanly into one category. Providers of paper portfolios may have their models offered on platforms in the other four channels. 
• Most model portfolios provide asset-allocation, fund selection, and trading guidance for target-risk strategies, though single-asset-class models also exist. 
• Advisors can outsource or build model portfolios themselves, with customization as a middle ground between the two. (See the model portfolio spectrum below.) 
• Different channels offer varying degrees of automation. Advisors following paper portfolios likely handle trading themselves and have more freedom to customize. Wirehouse-affiliated advisors and broker/dealers can automate those actions and may have fewer customization options.

Source: Morningstar.

• Our survey of 29 model portfolio providers revealed how fragmented platform placement is; respondents named 42 distinct platforms. 
• Despite the breadth, responses were concentrated, with only 11 platforms (in the chart below) receiving five or more responses. Envestnet emerged as the preferred platform. 
• Independent technology platforms dominated, capturing roughly 40% of all responses, reflecting their role as the connective tissue of the model portfolio ecosystem, accessible to advisors across many different firms and channels. 
• Wirehouses, by contrast, appeared far less often, only gathering 11% of the 148 total responses. 
• Platform placement matters: being available on the right platforms determines which advisors can access a model, and by extension, a provider’s reach.

Source: Surveyed data. Data as of March 31, 2026.

• Model portfolios have become a staple for financial advisors, providing efficiency and scale to their practices.
• Advisors recognize the benefits of model portfolios. In the 2026 Morningstar Investor Perspectives survey of advisors, they noted a wide range of benefits with simpler investment processes, time savings, and ability to focus more on client relationships and planning as the top advantages.

Source: 2026 Morningstar Investor Perspectives. Data as of May 31, 2026.

• Third-party model portfolios held more than USD 943 billion of assets under advisement as of March 31, 2026, a 46% increase since Morningstar’s last survey in March 2025. 
• Since Morningstar’s first survey in June 2021, assets have more than tripled and will soon cross the USD 1 trillion mark, signaling how important models have become for financial advisors. 
• Figures combine survey responses from 32 providers and assets under advisement reported by more than 50 others; surveyed assets account for 95% of the total. 
• This report doesn’t include home office model portfolio assets from wirehouses and broker/dealers, since they are not distributed outside of those firms.

Source: Survey data, Morningstar Direct. Data as of March 31, 2026. Includes data from Columbia Threadneedle and Russell Investments as of Dec. 31, 2025. Totals include custom model portfolios.

BlackRock still dominates model portfolios, overseeing USD 308 billion.  

• Assets nearly doubled since March 2025. 
• Strong offerings led by portfolio manager Michael Gates, growing custom mandates, and a vast network of relationships with financial advisors contribute to their sustained dominance. 

Model provider SEI reported assets for the first time and ranked in the top 10 with USD 56 billion, highlighting their popularity with financial advisors.  

Other highlights: 

• Goldman Sachs jumped into 10th place since our last report, while WestEnd Advisors and Janus Henderson dropped out. 
• After a couple of years of stagnation, Vanguard’s model assets grew to USD 33 billion, its largest sum since our first survey in 2021.
• Capital Group overtook Wilshire as the second-largest provider on the back of continued demand for their excellent off-the-shelf offerings.

Source: Survey data, Morningstar Direct. Data as of March 31, 2026. Includes data from Columbia Threadneedle and Russell Investments as of Dec. 31, 2025. Totals include custom model portfolios. *Morningstar Investment Management LLC and Morningstar Investment Services LLC.

Source: Survey data, Morningstar Direct. Data as of March 31, 2026. Columbia Threadneedle and Russell Investments data as of Dec. 31, 2025.

• Model portfolio asset flows are challenging to track, but 18 firms* from our survey provided data. So, while not exhaustive, nearly USD 43 billion flowed into model portfolios in 2025, an increase of roughly 42% from 2024. 
• BlackRock claimed more than half of 2025 net inflows, according to the survey.
• Capital Group saw solid demand with net flows of just under USD 11 billion.

Source: Survey data, author's calculations. Data as of Dec. 31, 2025. *18 firms also provided data for 2024 and 17 for 2023.

• There were 346 launches in 2025. This was the highest since 2019 and third-highest on record. Roughly 80% of them fell under the allocation category group; the remaining 20% were single-asset model portfolios (equity, fixed income, liquid alternatives, digital assets).
• The 510 activations in 2025 were the second-highest ever, trailing only 2021’s 1,044. 
• The 125 closures in 2025 exceeded the 10-year average of 68 but fell below 2022-2024’s surge. 2024 remains the only year with more closures than launches.
• The first quarter of 2026 alone recorded 363 activations and 88 closures. Launches have been more muted, at 21. 
• Despite ongoing pruning, the number of model portfolios reported to Morningstar has grown steadily, averaging growth of 9% per year from 2016 to 2025.

Source: Morningstar Direct, author's calculations. Data as of March 31, 2026.

• BlackRock Multi-Asset Income Private Market model portfolios launched in September 2025 and allocate 10% to 20% of assets to BlackRock Credit Strategies CREDX, the firm’s closed-end private debt fund. 
• CAM WealthBlox Private Markets model portfolios, launched May 2025, consist entirely of interval funds and a tender-offer fund (KKR Real Estate Trust KRSTX) that invest in private equity, private debt, and direct real estate/infrastructure. They use other firms’ funds, including KKR, Cliffwater, Calamos, Franklin, and Meketa. 
• In March 2026, Fidelity also launched Fidelity Model Portfolios with Private Markets and Fidelity Model Portfolios with Private Markets—ETF Focused. 

• Digital assets firm Bitwise launched six model portfolios in January 2026, including Bitwise Select Crypto Market Portfolio, which includes the firm’s cryptocurrency index ETF Bitwise 10 Crypto BITW and a thematic crypto equity ETF Bitwise Crypto Industry Innovators BITQ. 
• Synergy Focused Digital, which launched in May 2025, mixes cryptocurrency ETFs and public companies that the firm deems to have material business operations in the cryptocurrency and digital assets space. 
• Franklin Templeton’s Core Multi-Manager + Digital Assets model portfolio allocates roughly 1% to 6% of assets to Franklin Crypto Index ETF EZPZ.

• DoubleLine launched three open-architecture fixed-income models in March 2025: DoubleLine Intermediate Fixed Income, DoubleLine Multi-Sector Fixed Income, and DoubleLine Short Duration Fixed Income. These portfolios combine in-house funds with funds by Fidelity, State Street, and BlackRock.
• Vanguard launched a series of target-maturity corporate bond portfolios in March 2026: Vanguard 0-3 Year, 0-5 Year, 0-7 Year, and 0-10 Year Target Maturity Corporate Bond Portfolios. These portfolios mix Vanguard's Intermediate-Term Treasury Index ETF VGIT with a collection of in-house target-maturity corporate bond ETFs. 

• Several large asset managers rolled out ETF-only counterparts to their allocation portfolio suites. Capital Group’s ETF models launched in January 2025, including Capital Group ETF Growth and Capital Group ETF Growth and Income models; Vanguard’s Core ETF allocation models debuted in June 2025; T. Rowe Price Blend ETF target-risk models came out in October 2025. 
• Even outside of allocation portfolios, several new launches were ETF-only—including DoubleLine’s fixed-income portfolios and Franklin Templeton’s multimanager portfolios with digital assets—reflecting growing demand for ETF-based solutions.

• Fees are a key driver of long-term investment results and remain a central consideration for advisors when evaluating model portfolios. 
• Model portfolios typically derive their cost advantage over mutual funds from the use of lower-cost underlying vehicles, particularly ETFs. Lower costs have been a key driver of model portfolio adoption, particularly for multi-asset allocations. 
• The following analysis compares the Morningstar prospective acquired fund expense data point for models, which is the asset-weighted average of the underlying holdings’ net expense ratios, with the prospectus-adjusted expense ratios for mutual funds, using Morningstar’s Clean Share—Service Fee Arrangement classification. This framework groups mutual fund share classes into three categories:
  • Bundled: Mutual fund share classes that include distribution-related payments such as load-sharing arrangements or payments to third parties for distribution fees.
  • Semibundled: Mutual fund share classes that do not pay third-party distribution fees or engage in load-sharing arrangements. However, these share classes may still pay third parties for subtransfer agency services or participate in revenue-sharing arrangements. 
  • Unbundled: Mutual fund share classes that do not make payments to third parties, either through share-class expenses or revenue-sharing arrangements.
• Model portfolio fees reflect underlying fund costs only and do not include additional fees that advisors or platforms may charge. Therefore, comparing model fees to mutual fund unbundled fees is most appropriate.
• Multi-asset model portfolios dominate the model portfolio universe and compete aggressively with mutual funds on price.

• US-focused allocation models are the lowest-cost option across all categories, with fees tightly clustered between 0.33% and 0.40%.
• The fee advantage over unbundled mutual funds, the fairest comparison, ranges from 0.08% to 0.40% depending on the category, with the gap widest in aggressive allocations. 
• Bundled mutual funds remain the most expensive structure by a wide margin, averaging more than 1.30% across all categories, almost 4 times the cost of the average model portfolio.

Source: Morningstar Direct, survey data, author's calculations. Data as of Dec. 31, 2025.

• Global allocation model portfolios are modestly cheaper than their US-focused counterparts despite incorporating US and non-US exposures. 
• Model fees range from 0.31% to 0.38%, comparable to US-focused allocation models and well below all three mutual fund share-class structures. 
• The fee advantage of global allocation models over unbundled mutual funds is most pronounced in more aggressive allocation categories, consistent with US-focused allocation models.

Source: Morningstar Direct, author's calculations. Data as of Dec. 31, 2025.

• Models maintained a consistent fee advantage over mutual funds from 2021–2025, even as both have declined.
• Model fees fell from 0.42% in 2021 to 0.35% in 2025, while mutual fund fees also eased slightly across share classes (bundled: 1.35% to 1.32%, semibundled: 0.83% to 0.79%, unbundled: 0.62% to 0.61%).
• The average fees for both models and mutual funds have generally decreased over time, but the gap has remained meaningfully in favor of models. As of December 2025, the average model portfolio costs 0.35%, making it 0.27 percentage points cheaper than the average unbundled mutual fund (0.62%).
• These figures exclude any additional advisor or strategist fees layered on top of models, ETFs, or mutual funds.

Source: Morningstar Direct, author's calculations. Data as of Dec. 31, 2025.

• In the five-year period between March 2021 and March 2026, exchange-traded funds overtook mutual funds as the typical model’s top underlying investment vehicle as a percentage of assets. In that time, the average model increased its allocation to underlying ETFs by more than 13 percentage points.
• Today, the average model portfolio holds more than half its assets in ETFs, while mutual funds take up about a third of assets. 
• The Morningstar Categories represented by ETFs within model portfolios have not changed much. The large-blend, large-growth, large-value, foreign large-blend, intermediate core bond, short-term core bond, corporate bond, and diversified emerging-markets categories accounted for 52% of underlying ETF assets in the typical model portfolio as of March 2026, compared with 50% five years prior.
• ETFs’ asset-class role in a typical model portfolio hasn’t changed much over the period, but there has been a greater shift in active and passive ETFs used within models.

Source: Morningstar Direct and author's calculations. Data as of March 31, 2026.

• Financial advisors are increasingly leaning into ETFs at the expense of mutual funds, with ETFs jumping 4 percentage points over the past two years as a share of advisor AUM. 
• Most advisors also expect that ETFs will increase as a share of their AUM over the next two years, while more than a third expect the mutual fund share to decrease. 
• Third-party model providers have listened to advisor demand, allocating more to ETFs as the previous chart shows.

Source: 2026 Morningstar Investor Perspectives. Data as of May 31, 2026.

• Between 2021 and 2026, the overall balance of actively managed and passively managed has remained stable, with active management representing 54% of underlying assets on average compared with 53% five years prior. 
• Within ETFs, however, active management is gaining traction, rising to 29% of ETF allocation from just 9% in 2021. 
• Among underlying mutual funds, there has been no major shift. The average model portfolio used active management for 94% of underlying mutual funds.
• Model portfolios’ increased use of actively managed ETFs has raised the average cost of the ETFs they use. ETFs in model portfolios averaged a 0.26% prospectus adjusted expense ratio in March 2026, compared with a 0.22% average in March 2021. Over the same period, the average prospectus-adjusted expense ratio for mutual funds in model portfolios went down to 0.69% from 0.74%.

Source: Morningstar Direct, author's calculations. Data as of March 31, 2026.

• Asset managers have been rolling out more semiliquid vehicles, such as interval funds, that offer private market exposure, and model portfolios have joined the trend.
  • Sixty-nine percent of firms surveyed said they currently offer or plan to offer private market exposure within model portfolios over the next three years, suggesting firms are shifting from exploration to implementation.
• Proponents of private-market exposure say it offers diversification, different income streams, and more opportunities beyond public markets. Models’ growing use of private assets increases access to institutional-style strategies, but also introduces concerns about liquidity constraints, valuation complexity, operational oversight, and higher fees.
  • Eight firms said they do not currently plan to offer private market exposure within models, reflecting differing views on implementation, demand, and the role of semiliquid alternatives.

Source: Surveyed data. Data as of March 31, 2026.

• Among the 20 providers planning to offer models with private assets, 44% expect to combine internal capabilities with external partnerships, while 33% plan to rely  on internal capabilities and 22% on external partnerships alone. 
• Several firms disclosed partnerships with established private markets managers and distribution platforms, highlighting the importance of external relationships in growing semiliquid private market offerings. Notable partnerships include: 
  • Capital Group and KKR 
  • T. Rowe Price and Goldman Sachs 
  • BlackRock with GeoWealth, Vestmark, and Envestnet 
  • SEI and Carlyle 
• Many firms expect private market allocations to remain moderate: 5% to 10% and 10% to 20% were the most common target ranges. 
• The modest allocation expectations suggest providers are taking an incremental implementation approach, considering liquidity constraints, operational complexity, valuation complexity, and higher fees.

Source: Surveyed data. Data as of March 31, 2026.

• Private credit was the most cited asset class, followed closely by private real estate and private equity. Private infrastructure received more selective interest. 
• The slight preference for private credit likely reflects its lower liquidity risk, income orientation, and a more defined return profile relative to private equity, making it a more natural entry point for diversified model portfolios. 
• Interval funds were the preferred implementation vehicle, reflecting their balance between private market access, operational scalability, and periodic liquidity for advisors and end investors. 
• Despite growing adoption, semiliquid private market vehicles still have disadvantages relative to public market funds, including reduced liquidity, more-complex valuation processes, operational oversight challenges, and higher fees.

Source: Surveyed data. Data as of March 31, 2026.

• While most model providers offer or plan to offer models with private asset exposures, nearly 40% of financial advisors in the 2026 Morningstar Investor Perspectives survey said they are not very familiar or not familiar at all with semiliquid funds. Just 16% said they are very familiar. This lack of familiarity could slow adoption.
• Within model portfolios, the provider typically selects or manages the private market vehicles—a key value proposition—but advisors still need to be able to explain liquidity terms, redemption windows, and fee structures to clients. 
• Lower familiarity can impact client communications; in the survey, advisors cited limited liquidity, high fees, and complexity as the top three challenged they face when offering alternatives.

• For this research, Morningstar defines “custom” as models managed outside a provider’s off-the-shelf offerings. 
• Models can be great solutions, but there is no one-size-fits-all portfolio, and some advisors may want to tweak off-the-shelf models to better fit their clients’ unique needs or preferences. 
• Model providers work with advisors and advisor firms to create custom model portfolios at the individual and practice levels, typically using their off-the-shelf models as a starting point. 
• As the spectrum in the next section shows, custom models provide a middle ground for advisors where they can still benefit from the expertise of professional management and efficiency of model portfolios while having some say.

• By definition, “custom” could mean many things. That said, our research identified some common customizations across providers:
  • Fund/vehicle substitutions
  • Additional asset classes
  • Fund lineup consolidation
  • Strategic asset-allocation adjustments
  • Trading frequency

• As part of our survey, many providers said they do not charge any extra fees for customization or that fees vary based on the mandate. 
• Some providers, like Capital Group, Franklin Templeton, and Janus Henderson, will charge a fee if proprietary products don’t account for a certain percent of assets, ranging from 30% to 70%. 

• While some providers indicated that the minimum account size is typically set by individual firms or platforms, others do require a minimum level to customize: 
  • T. Rowe Price: Varies based on the degree of customization. 
  • RiverFront: USD 1 million.
  • American Century: USD 25 million to USD 50 million over 12-18 months. 
  • Janus Henderson: Typically, USD 50 million but can vary. 
  • SEI: USD 50 million.
  • BlackRock: USD 100 million.
  • J.P. Morgan: USD 100 million over 12-18 months. 
  • Capital Group: USD 150 million with at least 70% in Capital Group funds; threshold can be negotiated.
  • Franklin Templeton: USD 150 million over 12 months. USD 450 million if less than half of the portfolio’s assets are proprietary funds. 

Source: Morningstar.

• The 2026 Morningstar Investor Perspectives survey revealed that 70% of financial advisors utilize model portfolios in their practice, but nearly a third haven’t made the step. 
• Advisors not offering model portfolios cited preferring customized portfolios and a desire for more control over investment decisions as the biggest reasons. As a middle ground between outsourcing and do-it-yourself, custom models could address some of the concerns and highlight their appeal.

Source: 2026 Morningstar Investor Perspectives. Data as of May 31, 2026.

Do: 

• Define the investors’ objectives and risk tolerance before making any changes. 
• Ensure strategic asset-allocation tweaks are within reasonable bands—5 or 10 percentage points—around the original portfolio. 
• Ask how allocation changes and fund swaps will affect the portfolio’s exposures, risks, liquidity, and total costs before implementing, especially when considering:
  • Substituting active funds for passive ones.
  • Tilting toward higher-octane areas, like growth stocks or high-yield bonds.
  • Including exposure to cryptocurrencies.
• Consider the tax implications of fund swaps before implementing, since replacing a fund with embedded gains can trigger a taxable event. 
• Document the rationale for any customizations so the portfolio’s deviation from the original model can be explained and defended over time.

Don’t: 

• Customize for the sake of customizing.
• Shift allocations too far from the original model, which may misalign a portfolio with the investor’s objectives and risk tolerance. 
• Substitute a drastically different fund from a model’s recommended strategy; it could dramatically change exposures. 
• Add large allocations to volatile assets like cryptocurrencies simply because of their strong performance. Just a touch of such investments can significantly alter a portfolio’s risk profile.
• Make so many changes to the model that it negates the point of choosing a model in the first place. 
• Customize portfolios so inconsistently that they can no longer be managed efficiently at scale. 
• Introduce less liquid or harder-to-trade exposures without considering rebalancing and client liquidity needs.

We collected custom model assets from 23 providers, totaling USD 258 billion as of March 31, 2026. While not exhaustive, that growing sum shows there is demand from financial advisors for more-tailored portfolios.  

• The total is a 40% increase since March 2025. 
• BlackRock leapfrogged Wilshire over the last year, growing its custom business by 57%. 
• While providers outside of the top two exhibited healthy growth over the trailing year, the leading duo occupies over half of assets. 
• We expect to see continued growth as firms expand their capabilities and services to meet advisor demand for customized models.

Source: Survey data. Data as of March 31, 2026. Russell Investments' data as of Dec. 31, 2025.

Source: Surveyed data and author's calculations. Data as of March 31, 2026.

• Custom models represent a meaningful and growing share of assets for many providers, with several firms deriving most model assets from custom solutions. 
• Even the largest model providers are leaning into custom offerings, using them to complement core model platforms and deepen advisor relationships. 
• Custom models account for around 97% of Wilshire’s models’ business compared with the group median of 28%. The firm’s specialization stems from its relationships with large broker/dealers. 
• Some large asset managers, like Capital Group and J.P. Morgan, are still building a presence in custom models, and custom assets remain a small share of their total model assets.

Source: Surveyed data and author's calculations. Data as of March 31, 2026.

Morningstar’s Manager Research analysts assign forward-looking, qualitative Morningstar Medalist Ratings based on their assessments of strategies’ investment merits. The ratings range across Gold, Silver, Bronze, Neutral, and Negative, indicating the analysts’ confidence in the strategies’ ability to outperform their average Morningstar Category peers on a risk-adjusted basis net of fees. 

• In March 2019, Morningstar began assigning Medalist Ratings to separate accounts that represented models. In 2021, we expanded the eligible universe to include hypothetical models to help advisors assess the full range of their adoptions.
• As of May 15, 2026, Morningstar Manager Research analysts assigned Medalist Ratings to 38 allocation model portfolio series.

Several model portfolios changed their Medalist Ratings in April 2026, when Morningstar updated its Medalist Rating methodology.  

The following sections show the Morningstar Medalist Ratings for allocation model portfolios under 100% analyst coverage, as of May 2026. 

Source: Morningstar. Medalist Ratings as of May 31, 2026. *Only considers the best Medalist Rating that a model portfolio series attained.

Source: Morningstar. Medalist Ratings as of May 31, 2026. American Funds Preservation Portfolio Series holds split Morningstar Medalist and pillar ratings across the portfolios.

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