ETFs vs Multi-Asset Funds

Are ETFs the New Kids on the Block?

Over the past few years, Exchange-Traded Funds (ETFs) have exploded in popularity. They’re low-cost, transparent, and often talked about as the future of investing, especially by those who like to take a hands-on approach.

But what about multi-asset funds — the long-standing favourites of pension schemes and diversified portfolios? Are they being replaced, or do they still have a key role to play?

Let’s unpack what each option offers, how they differ, and how they can both fit into a well-constructed investment strategy.

What Exactly Is an ETF?

An Exchange-Traded Fund (ETF) is an investment fund that trades on a stock exchange, just like a share. Each ETF typically tracks a specific index, such as the FTSE 100, S&P 500, or a global bond index, by holding all (or a representative sample) of the investments within that index.

Because ETFs are designed to follow a market rather than beat it, they are usually passively managed. This means:

Lower ongoing costs – there’s no team of managers trying to outsmart the market.
Transparency – you can see what’s inside the ETF, often updated daily.
Liquidity – they can be bought or sold throughout the trading day.
Variety – there’s an ETF for almost every market, theme, or region imaginable: technology, clean energy, emerging markets, ESG investing, even inflation-linked bonds.

They’ve become a favourite among DIY investors who like the idea of controlling their own portfolios. You can build a globally diversified mix of ETFs at a relatively low cost, and many platforms make it easy to do so.

However, ETFs aren’t just for the self-directed. Many professionally managed portfolios now use ETFs as their building blocks, combining the efficiency of ETFs with the discipline and oversight of an investment manager.

What Is a Multi-Asset Fund?

A multi-asset fund does exactly what the name suggests: it invests across multiple asset classes such as shares, bonds, property, and cash, all within one single fund.

The idea is simple but powerful: different assets behave differently in changing market conditions. By combining them, the overall portfolio aims to deliver smoother, more consistent returns than investing in one asset type alone.

There are three broad types:

Active – a professional fund manager decides which assets to hold, when to make changes, and how to respond to market events.
Passive – follows a predetermined allocation or benchmark, adjusting only to maintain balance.
Blended – uses both approaches, combining active oversight with low-cost passive components.

Multi-asset funds are especially popular within pensions and ISAs, as they provide an all-in-one solution that automatically rebalances and stays aligned with a set level of risk.

For example, a “Balanced” multi-asset fund might hold around 60% equities and 40% bonds, whereas a “Cautious” version might tilt more towards bonds and cash.

ETFs vs Multi-Asset Funds — Key Differences

Feature	ETFs	Multi-Asset Funds
Structure	Price changes throughout the day	Priced once per day
Management Style	Usually passive	Often active or blended
Diversification	Focused on one market or index	Diversified across many asset classes
Cost	Typically lower ongoing charges	Slightly higher, but all-inclusive
Ease of Use	Requires investor oversight and rebalancing	Fully managed and automatically rebalanced
Transparency	Daily holdings published	Updates less frequent, but clear strategy
Minimum Investment	Often low for retail investors	Some professional share classes have high minimums but are accessible via advisers

Costs and Simplicity

When it comes to cost, ETFs are often cheaper on paper. Many large ETFs charge ongoing costs of as little as 0.1%–0.3% per year.

However, that’s not the full picture. If you’re building and maintaining your own ETF portfolio, you’ll also need to consider:

Platform charges for holding ETFs.
Trading fees each time you buy or sell.
The time commitment required to monitor and rebalance your holdings.

A multi-asset fund, by contrast, wraps everything into one straightforward product. You pay a single annual charge that covers the cost of managing and rebalancing the portfolio. It may look slightly higher (often 0.2%–1.0%), but it’s far simpler, particularly for long-term investors who value peace of mind.

Think of it like this:

ETFs are like cooking from scratch — you pick your ingredients, manage the recipe, and adjust to taste.
Multi-asset funds are like ordering a ready-made, balanced meal — someone else has done the planning, preparation, and portion control for you.

The Role of Financial Advisers — Access and Expertise

Here’s something not widely known outside the industry: financial advisers often have access to special “institutional” or “adviser” share classes of multi-asset funds that aren’t available directly to retail investors.

These versions:

Are typically available only through investment platforms used by advisers (such as Quilter, Transact, or AJ Bell Investcentre).
Can carry lower ongoing costs due to economies of scale.
May also include access to institutional fund ranges that would otherwise require a very high minimum investment — often £100,000 or more per fund.

In other words, by investing through an adviser, clients can access professionally managed, globally diversified portfolios that wouldn’t be available directly through retail platforms.

Advisers can also tailor portfolios more precisely to your goals, risk profile, and tax position, which goes beyond simply choosing between an ETF or a multi-asset fund.

Which Is Better for You?

There’s no one-size-fits-all answer. The right choice depends on your investment goals, experience, and appetite for involvement.

ETFs may be right for you if:

You enjoy taking an active interest in investing.
You’re comfortable making decisions about asset allocation.
You’re happy to monitor markets and rebalance when needed.
You want maximum cost efficiency and flexibility.

Multi-asset funds may be better if:

You prefer a hands-off approach.
You value professional oversight and regular rebalancing.
You’d rather keep things simple and focus on long-term outcomes.
You want a single, diversified solution within your ISA, SIPP, or GIA.

In reality, many investors use both. For example, you might hold a global multi-asset fund as the “core” of your portfolio, while using ETFs for specific themes or tactical positions (such as technology or global bonds).

The Future: Blurring the Lines

Interestingly, the distinction between ETFs and multi-asset funds is becoming less clear.

Many of today’s multi-asset funds actually use ETFs as their underlying holdings, combining the cost efficiency of ETFs with the professional oversight of a managed fund. At the same time, ETF portfolios managed by investment firms are offering ready-made, risk-based solutions similar to traditional multi-asset funds.

The message? It’s not really a competition; it’s an evolution. Investors now have more choice, flexibility, and transparency than ever before.

Final Thoughts

Whether you prefer to keep full control with ETFs or outsource the decisions to a multi-asset manager, the principles of good investing remain the same:

Spread risk across markets and asset classes.
Stay invested. Trying to time the market rarely works.
Review regularly. Make sure your portfolio still fits your goals and circumstances.

At Glade Financial, I believe confidence comes from clarity and understanding how and why your money is invested. Whether you’re exploring ETFs, multi-asset funds, or a combination of both, the goal is the same: to help your money work efficiently and sustainably towards your future.

Important Information

This article is for information purposes only and does not constitute financial advice. The value of investments can go down as well as up, and you may not get back the amount you invest. Tax treatment depends on individual circumstances and may change in future. You should seek personalised advice before making investment decisions.