Grilling Season and ETFs: There's More Than One Way to Cook Up a Portfolio

As grills get hot and coolers fill up over the summer, one thing remains clear: Across America, people have strong opinions about how to barbecue. Charcoal or gas? Dry rub or marinade? Burgers, ribs or something a little more adventurous?

After two decades in the ETF world, I can't help but see the similarities between barbecue season and investing. In both cases, there is no single right approach.

In 2025, ETF investors are mixing things up more than ever, building portfolios with the same kind of personal flair you find on a backyard grill.

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The no-fuss griller

Some keep it simple. They go with a propane grill, classic beef patties with a dash of salt and pepper and reliable sides. Nothing flashy, but this method generally allows for reliable results. That's the passive ETF investor.

These portfolios lean on broad, low-cost market exposure and often include international allocations. In a year where diversification matters more, we've seen growing interest in ETFs that go beyond U.S. borders to capture opportunities in developed and emerging markets.

This is especially relevant in 2025, as U.S. equity valuations remain high and investors seek more balanced risk-adjusted returns.

Index-based ETFs are the foundation for many portfolios, and they continue to attract inflows because of their clarity, efficiency and low costs. For investors looking to "set it and forget it," passive ETFs still make a lot of sense.

The recipe-follower

Then there are those who have perfected their recipe over time and know exactly what goes into the mix. My Uncle Mike's burgers, for example, include egg, corn flakes and garlic salt, all added in careful proportion to the amount of 80/20 ground beef.

This approach takes more effort upfront, but it consistently produces expected results.

The same applies to investors who use factor-based ETFs to screen for attributes like quality, value or momentum. Their strategy is rules-based and designed to optimize outcomes over time.

Factor investing has had a resurgence in 2025, as volatility, dispersion and sector rotations have created opportunities for more precise portfolio tilts. Investors are leaning into strategies that can target specific outcomes, whether that's downside protection, income generation or long-term growth potential.

The pitmaster tinkerer

Finally, some grill masters bring their own flair. They may know the basics, but they like to adapt. They test new marinades, rotate dishes depending on the crowd and fine-tune their technique as they go.

That's the active ETF investor in 2025. These investors want professional insights and flexibility in one wrapper, and they are increasingly using actively managed ETFs to adjust in real time to what the market presents.

The appeal of active ETFs is growing fast, particularly in areas where research-driven insights and nimble decision-making offer potential advantages.

This includes fixed income, where duration positioning has been critical as interest rate expectations shift, as well as equity strategies that aim to sidestep frothy parts of the market.

What the 2025 flows show

Through the first half of the year, U.S. ETFs brought in hundreds of billions in net inflows. According to Morningstar:

• Roughly 55% of those flows went to traditional passive strategies
• About 8% went to smart beta or factor-based ETFs
• And nearly 37% went to active ETFs

That kind of split reflects what many investors already know — there is no single way to invest, and today's ETF market gives you the tools to build your own recipe.

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It also shows that ETFs are no longer synonymous with just indexing. The wrapper has evolved, and today it houses strategies that span the full spectrum, from core market exposure to highly tailored active approaches.

Whether you're seeking global diversification, tactical plays or outcome-oriented strategies, ETFs offer a format that delivers cost efficiency, transparency and accessibility.

Freedom to invest your way

The ETF marketplace today is like a packed grill. Some investors want a simple approach, others prefer to follow a detailed playbook, and plenty prefer the freedom to adapt.

ETFs can support all three styles, and the data shows that investors are embracing the full menu.

As August kicks off, it's a good time to reflect on the flexibility today's markets offer and the freedom investors have to build portfolios that match their goals.

Whether you are a seasoned investor or just getting started, ETFs give you the flexibility to build a strategy that fits your goals, your preferences and your level of involvement.

Remember, your portfolio can be just as flexible as your grill menu.

Enjoy the rest of summer, stay invested and stay well diversified with ETFs.

All investments involve risks, including possible loss of principal. The value of investments can go down as well as up and investors may not get back the full amount invested. Generally, those investments offering potential for higher returns are accompanied by a higher degree of risk. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors or general market conditions. For actively managed ETFs, there is no guarantee that the manager's investment decisions will produce the desired results.

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