Morningstar also found that seven of the 20 strategies with the largest quarter-over-quarter increase in assets were vanilla stock and bond strategic asset allocation portfolios, which reflects the ongoing shift of investor preferences that was initially spurred by the decline in high-flying tactical strategies.

Related: Tech Shares Help Lift U.S. Stock ETFs As Energy Drags

Fueling demand for ETF managed portfolios, clients are actively asking multi-asset managers to increase ETF allocations in their portfolios. Managers are also expanding their investment base with ETFs to meet specific goals. More active managers are also adopting ETFs due to the many benefits of the investment vehicle, such as low fees, deep liquidity, tax efficiency and as replacements for futures and to access broad asset classes.

ETF managed portfolios are investment strategies that hold more than 50% of assets invested in ETFs and represented one of the fastest growing segments in the separate accounts space. Specifically, ETF managed portfolios offer three major investment themes: tactical, strategic and hybrid mix. The tactical offerings provide short-term plays to capitalize on investment opportunities that are forming, whereas the strategic play provides long-term allocation across sectors and asset classes. Additionally, the hybrid mix includes a combination of tactical and strategic elements.

For more information on the separate accounts space, visit our ETF managed portfolios category.