Exchange traded fund allocators are quickly taking market share from traditional mutual fund managers, according to a report this week. Investors are keen to the trend toward managers who use ETFs as core holdings in a stand-alone portfolio, spreading capital across asset classes.

“The growth in this area is undeniable, and it’s not a fad,” said Scott Burns, head of ETF research for Morningstar, reports Christopher Condon for Bloomberg.. “There’s a shift going on from seeking outperformance on an individual-company basis to seeking it on a macro basis.”

“ETFs allow us to replicate a core family office portfolio,” said Chris Wyllie , co-manager of  Iveagh Wealth Fund, according to the Bloomberg report. “I’m not sure you could have done that five years ago.”

The trend toward ETF use has sparked the general movement toward index-based investments over the past few years. The general idea that investors want to use ETFs is indicative that they are not interested in a completely passive approach anymore. Asset allocation that works today, may not be suitable in a few months, or even a few weeks. [Defensive ETF Plays.]

Many firms are managing less then $1 billion and pooling the capital into asset allocation strategies from individual client accounts. Most of the high-net worth clients and institutional investors are contenders for the asset allocation strategy with ETFs, according to the report.

Some managers argue that the asset allocation strategy is too similar to market timing. The outlook is too short -term and lacks any long term point-of-view. [How ETFs Are Changing Investing, Markets.]

“To the extent that some managers are trying to replace active security selection with active allocation across sectors, that is another name for market timing,” said Edward C. Bernard , vice chairman of Baltimore-based T. Rowe Price Group. “History suggests that is rarely a durable strategy.”

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.