Your Advisor Is Not Choosing Your Holdings, and That’s OK

Third-party model portfolio assets reached $934 billion as of March 31, 2026, a 45% increase over the trailing year and more than triple the amount recorded in Morningstar’s first survey in June 2021. The growth reflects how central model portfolios have become to financial advisors’ practices.

Models allow advisors to outsource some, or all, of investment management, providing efficiency and scale. In the 2026 Morningstar Investor Perspectives survey of advisors, the top-cited benefits of model portfolios included simpler investment processes, time savings, and greater focus on client relationships and planning.

Our full findings are available in the 2026 US Model Portfolio Landscape report.

Key Takeaways

• BlackRock Extends Its Lead
• Flows Remain Strong and Concentrated
• ETFs Cement Their Status as the Vehicle of Choice
• Private Markets Have Arrived

BlackRock Extends Its Lead

BlackRock remained the dominant force in the model portfolio market, overseeing $308 billion as of March 31, 2026, which is nearly double its total from the prior year. The firm’s model offerings also accounted for roughly one-third of total third-party assets, up 26% over the trailing year. Strong off-the-shelf models led by portfolio manager Michael Gates, growing custom mandates, and a vast network of financial advisor relationships continue to drive growth.

Capital Group overtook Wilshire to claim second place, with $91 billion in model assets, on the back of solid growth in its excellent suite of off-the-shelf model portfolios. Wilshire followed in third with $77 billion, with custom models accounting for much of its models business.

Model provider SEI reported assets to Morningstar for the first time, debuting in the top 10 with $56 billion, underscoring the firm’s established presence among financial advisors. Goldman Sachs also broke into the top 10, while WestEnd Advisors and Janus Henderson dropped out.

Flows Remain Strong and Concentrated

Tracking model portfolio asset flows is inherently difficult for model providers. Whereas other vehicles, like mutual funds and exchange-traded funds, have more standardized processes for their flows data, advisors utilize providers’ models across several platforms that may have inconsistent methods for reporting that data to the model providers. Many more people could be following a provider’s models than it realizes, too.

Despite the challenges, 18 firms from our survey provided flows data for 2025. Among those, model portfolios gathered nearly $43 billion in net inflows, a 42% increase over 2024.

The flows picture, like assets, is concentrated. BlackRock claimed more than half of 2025’s net inflows with $24 billion, reinforcing its industry dominance. Capital Group ranked second with just under $11 billion in net inflows, which is a solid haul. After those two, only four firms that reported flows reached $1 billion.

ETFs Cement Their Status as the Vehicle of Choice

ETFs have overtaken mutual funds in models. As of March 2026, ETFs accounted for 55% of the average model portfolio’s underlying holdings, up from 43% five years earlier. ETFs’ intraday liquidity, tax efficiency, and lower costs have driven the increase. Mutual funds now represent 34% of assets on average.

The rise of actively managed ETFs has been a big development. Actively managed ETFs represented just 9% of the average model portfolio’s ETF allocation in 2021; by March 2026, that figure had climbed to 29%. The overall balance between active and passive across all underlying vehicles has remained stable, but the actively managed vehicle has shifted.

That shift has modest cost implications. The average expense ratio of ETFs held in model portfolios rose from 0.22% in 2021 to 0.26% in 2026, since actively managed ETFs charge higher fees than passive ones. Even so, model portfolios maintained their fee advantage over mutual funds. The average asset-weighted model portfolio’s expense ratio fell to 0.35% at year-end 2025, compared with 0.61% for the average cheapest mutual fund share class.

Private Markets Have Arrived

Providers are increasingly offering private market exposure in model portfolios. Among the 29 providers surveyed, 69% said they currently offer or plan to offer private market exposure within model portfolios over the next three years, signaling that firms are moving from exploration to implementation.

Firms surveyed overwhelmingly chose interval funds as the preferred implementation vehicle. Among asset classes, private credit led the pack, followed closely by private real estate and private equity. Private infrastructure received less interest.

Model providers are taking a measured approach to private markets, with most firms planning on allocating somewhere between 5% and 20%, reflecting the practical constraints of incorporating less-liquid assets into diversified model portfolios. Several partnerships have emerged to do this, including Capital Group and KKR, T. Rowe Price and Goldman Sachs, and BlackRock with platforms GeoWealth, Vestmark, and Envestnet.

The trend is not without friction. Despite growing adoption, semiliquid private market vehicles have disadvantages relative to public market funds, including reduced liquidity, more complex valuation processes, operational oversight challenges, and higher fees. Nearly 40% of advisors surveyed in the 2026 Morningstar Investor Perspectives said they are not very familiar or not familiar at all with semiliquid fund structures, which could slow adoption.