BlackRock’s Elise Terry on how firms are using ETFs to chase alpha, income and access once reserved for institutions.
The importance of ETFs in investors’ portfolios is growing fast, along with the size and performance of this sector of the retail investment landscape.
Data from BlackRock shows that its iShares platform crossed $6 trillion in global assets in the second quarter of 2026 and the platform led global industry inflows in the first half of the year with a record $310 billion. Bond ETFs were a major driver with iShares topping global bond ETF inflows with $66 billion. At $1.3 trillion, the firm’s bond ETF platform would rank among the top five bond managers on a standalone basis, having grown nearly 20% over the past 12 months.
iShares also led active ETF inflows in the first half with $44 billion, building on more than $70 billion over the past year and cementing its place as the third-largest active ETF issuer.
Against that backdrop, Elise Terry, Head of US iShares at BlackRock, told InvestmentNews how registered investment advisors are rethinking the role ETFs play in client portfolios, and where she sees the fastest growth ahead.
“ETFs used to be the foundation of the portfolio. Today, they’re becoming the entire house,” she said, noting that where ETFs were once used mainly for cheap market exposure and tactical bets, advisors can now build almost an entire portfolio inside the wrapper. “Active ETFs are now a bigger part of the landscape than index ETF launches, options-based ETFs are delivering more targeted outcomes, and liquid alternatives are becoming increasingly accessible.”
That has changed what advisors expect from the vehicle itself. “ETFs are no longer just about access, they’re increasingly about outcomes,” Terry said.
Owning the market on purpose
With markets more concentrated than in years past, Terry said the debate among advisors isn’t whether to hold the broad market, but how deliberately they do it, adding that index investing “remains as relevant as ever” even as advisors apply it with more precision.
On income, Terry said the conversation has moved past simply chasing yield.
“The search for income has become a search for smarter income, not simply more risk,” she said, describing advisors as broadening their toolkit rather than reaching further out on the risk spectrum.
In fixed income, she pointed to active strategies which “allow managers to move across sectors in pursuit of attractive income while managing risk dynamically.” She also flagged rising interest in “plus sectors like CLOs.”
Outside of bonds, she said options-based ETFs such as the iShares U.S. Large Cap Premium Income Active ETF (BALI) are gaining traction because they aim “to balance enhanced monthly income with continued participation in equity upside.” The bigger theme, Terry said, is that “advisors are increasingly generating income through portfolio construction, not just additional credit risk.”
Buffers and international exposure
Asked where client demand is growing fastest without advisors fully catching on yet, Terry pointed to two areas: buffer ETFs and international equities. “The next wave of diversification is about changing portfolio behavior, not just geography,” she said.
Buffers, in her view, have evolved beyond their original purpose.
“Advisors are increasingly using buffers as portfolio construction tools, not simply downside protection, helping reshape a portfolio’s risk and return profile,” Terry said. On international markets, she noted that strong recent performance has been a reminder that “growth opportunities extend well beyond the US, even as many portfolios remain heavily home-biased.”
Her framing: “The opportunity isn’t simply owning more markets, it’s building more resilient portfolios.”
Tax efficiency as a differentiator
Tax management remains central to how sophisticated RIAs deploy ETFs, Terry said.
“It’s not just what you earn, it’s what your clients keep,” she said, noting that leading advisors “increasingly manage after-tax returns, not just pre-tax performance.” She described ETFs as “an exceptionally tax-efficient foundation,” while direct indexing strategies such as Aperio “add personalized tax-loss harvesting opportunities.”
Even inside direct indexing portfolios, Terry said ETFs still play a role “as transition tools, completion vehicles and efficient ways to access markets like emerging equities.”
Customization at scale
Terry said the fastest-growing advisory firms share a common approach to implementation.
“The future isn’t customization or scale, it’s customization at scale,” she said. These firms are standardizing how they build portfolios while still preserving room for individual client needs, with ETFs suited to that model because “they deliver consistent exposures, efficient trading and scalable implementation.”
She also pointed to two structural shifts: more firms building proprietary model portfolios, and smaller RIAs showing “greater willingness to outsource portfolio management through OCIO relationships so advisors can focus on planning and client relationships.”
As Terry summed it up, “ETFs are increasingly becoming the operating system behind scalable wealth management.”
Looking five years out
Asked what advisors should watch beyond the next few months, Terry pointed to one theme above all others: alternatives moving into the ETF structure. “The next ETF revolution isn’t another asset class, it’s another level of access,” she said.
Historically, ETF-based alternatives meant commodities and, more recently, digital assets. That’s changing, she said. “Today we’re seeing multi-strategy, hedge fund-like approaches become available in ETFs.”
Looking ahead, Terry said the shift will go beyond efficiency gains: “ETFs won’t simply provide more efficient market exposure, they’ll provide access to investment strategies that were historically harder to implement.”