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

A man grills in his backyard as his daughters play nearby. — (Image credit: Getty Images)

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.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/flexiimages/y99mlvgqmn1763972420.png

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

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.

Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth, our free, twice-weekly newsletter.

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.

ETFs and ETPs (exchange-traded products) trade like stocks, fluctuate in market value and may trade above or below the ETF's or ETP's net asset value. Brokerage commissions and ETF/ETP expenses will reduce returns. ETF/ETP shares may be bought or sold throughout the day at their market price on the exchange on which they are listed. However, there can be no guarantee that an active trading market for ETF/ETP shares will be developed or maintained or that their listing will continue or remain unchanged. While the shares of ETFs/ETPs are tradable on secondary markets, they may not readily trade in all market conditions and may trade at significant discounts in periods of market stress.

Any companies and/or case studies referenced herein are used solely for illustrative purposes; any investment may or may not be currently held by any portfolio advised by Franklin Templeton. The information provided is not a recommendation or individual investment advice for any particular security, strategy or investment product and is not an indication of the trading intent of any Franklin Templeton managed portfolio.

This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. This material may not be reproduced, distributed or published without prior written permission from Franklin Templeton.

The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The underlying assumptions and these views are subject to change based on market and other conditions and may differ from other portfolio managers or of the firm as a whole. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. There is no assurance that any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets will be realized. The value of investments and the income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is not necessarily indicative nor a guarantee of future performance. All investments involve risks, including possible loss of principal.

Any research and analysis contained in this material has been procured by Franklin Templeton for its own purposes and may be acted upon in that connection and, as such, is provided to you incidentally. Data from third party sources may have been used in the preparation of this material and Franklin Templeton ("FT") has not independently verified, validated or audited such data. Although information has been obtained from sources that Franklin Templeton believes to be reliable, no guarantee can be given as to its accuracy and such information may be incomplete or condensed and may be subject to change at any time without notice. The mention of any individual securities should neither constitute nor be construed as a recommendation to purchase, hold or sell any securities, and the information provided regarding such individual securities (if any) is not a sufficient basis upon which to make an investment decision. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

TOPICS

David Mann is the head of ETF Product & Capital Markets for Franklin Templeton. The Capital Markets team works with both investors and broker-dealers to help ensure Franklin ETFs trade as they were designed. The Product Development and Strategy team manages the global ETF pipeline across both index and active strategies. His responsibilities include working with liquidity providers to foster healthy creation and redemption processes and on-screen markets. He also partners with the Franklin distribution team to discuss ETF trading and structure, index construction, competitive analysis and industry trends directly with clients.