ETFs have become one of the defining investment vehicles of the past decade. Their appeal is clear: transparency, liquidity and cost efficiency. Yet as adoption accelerates, a structural tension is becoming increasingly visible, not in how ETFs are built, but in how they are accessed.
While effective for traditional trading use cases, this approach introduces friction across both retail and wealth channels. Each transaction is treated as an individual trade, often carrying higher costs, limited flexibility, and operational complexity – particularly when managing large volumes, portfolio rebalancing, or supporting behaviours such as regular savings, small-ticket investing and automated portfolio construction.
This is not a question of demand. Investor appetite for ETFs continues to grow across regions and client segments. Instead, it is a question of infrastructure. The way ETFs are accessed has not evolved to match how investors increasingly want to use them.
Recent industry sentiment reinforces this point. In a recent Calastone survey, the most commonly cited obstacle to increased ETF usage on investment platforms was high trading costs (40%), followed by lack of client interest (24%). The results highlight that while demand is not the primary constraint, cost and access mechanics remain key barriers to broader adoption.
By contrast, traditional funds benefit from a more aggregated, process-driven model. Orders are grouped, workflows are standardised, and investors can commit capital in smaller, regular increments. This has enabled the widespread adoption of savings plans and long-term investment strategies – particularly in retail markets.
The opportunity now is to bring these same capabilities to ETFs.
Rather than relying on fragmented, point-to-point connections to exchanges and brokers, a new model is emerging, one that allows ETF orders to be submitted, aggregated and routed through a single, standardised network. In this model, ETFs can be accessed in a more fund-like way: seamlessly integrated into existing workflows, with orders consolidated and executed at scale via authorised execution partners.
This approach delivers several structural advantages. It reduces the need for direct exchange connectivity and bespoke trading infrastructure. It enables institutional-style aggregation of orders, helping to lower the effective cost of access, directly addressing one of the most widely cited barriers to ETF adoption. And, where supported by execution partners, it opens the door to fractional ownership, unlocking micro-investing and making ETFs more accessible to a broader range of investors.
For platforms, wealth managers and model portfolio providers, the implications are significant. ETFs can be offered alongside existing fund ranges using the same connectivity and operating model. Portfolio rebalancing becomes more efficient. And new investor behaviours such as regular savings into ETFs become viable at scale.
For custodians and execution partners, the model creates access to a wider pool of distributors and assets without the need for complex, bespoke integrations.
At Calastone, we see this as a natural evolution of ETF infrastructure. Our ETF Order Routing capability enables firms to trade ETFs across the global Calastone network in a fund-like way, using existing connectivity to route orders to authorised execution and custody partners. Orders can be aggregated, translated and executed efficiently, while maintaining a clear separation of responsibilities across the value chain.
In doing so, it helps bridge the gap between trading and investing – removing barriers, reducing costs, and enabling ETFs to be used in the ways investors increasingly expect.
As ETFs continue to scale, the focus will shift from product innovation to access innovation. The firms that succeed will be those that make ETFs not just available, but truly usable, cost-efficient, flexible and accessible at scale.
