Registered investment advisors (RIAs) slowed their ETF turnover rates in 2025, with portfolio rebalancing and trading frequency declining across major equity and financial ETFs. The trend reflects a broader move toward holding strategies and reduced active management.
- RIA ETF turnover declined 12% in 2025, reflecting reduced trading activity.
- XLF turnover dropped 18%, SPY by 11%, and QQQ by 14% year-over-year.
- The slowdown is attributed to increased adoption of passive and long-term holding strategies.
- Liquidity in major ETFs remained robust despite lower turnover.
- Smaller-cap ETFs saw modest increases in trading frequency.
- Broader market prices were not significantly affected by the shift in RIA behavior.
Registered investment advisors (RIAs) decreased ETF turnover by 12% year-over-year in 2025, according to aggregated portfolio data. This marks a sustained shift from active trading toward longer-term holding strategies, particularly in core equity and financial sector ETFs. The slowdown was most pronounced in the financials sector, with XLF turnover dropping by 18% compared to 2024. Similarly, SPY and QQQ saw turnover declines of 11% and 14%, respectively, signaling reduced rebalancing and tactical positioning among advisory firms. The trend underscores a growing preference for passive allocation models among RIAs, driven by lower management fees, regulatory emphasis on fiduciary duty, and a market environment that favored buy-and-hold approaches over market timing. While turnover reductions were concentrated in large-cap growth and financial ETFs, small- and mid-cap ETFs showed marginally higher activity, indicating selective tactical adjustments in niche segments. Market liquidity remained stable despite the lower turnover, as trading volume in SPY, QQQ, and XLF continued to exceed daily average thresholds. However, bid-ask spreads in less liquid ETFs widened slightly, suggesting that reduced trading frequency may have a marginal impact on execution efficiency for certain instruments. The change did not trigger directional price movements in underlying indices, as market fundamentals and macroeconomic data remained the primary drivers of performance. The shift affects asset managers and broker-dealers that rely on transaction volume for revenue, particularly those offering advisory technology platforms tied to trade execution. Firms with strong custody and portfolio management tools may benefit from the trend, as RIAs seek to optimize long-term client outcomes over short-term trading gains.