ETF managed portfolios-those that typically have more than 50% of portfolio assets invested in ETFs-are one of the fastest-growing segments of the managed account sector, according to a newly released Morningstar report.

The ETF Managed Portfolio Landscape Report, authored by Andrew Gogerty, Morningstar's ETF Managed Portfolios Strategist, showed that assets in ETF Managed Portfolios grew 30% year-to-date and 48% since September 2011. Morningstar has identified almost 490 ETF managed portfolio strategies among 120 firms with total assets of $50 billion as of June, the report stated, adding that Global strategies accounts for about 61% of these assets.

Increased advisor demand is driving this asset growth, the report noted, adding that in the face of rising costs for investors from fee-based models in managed client portfolios, the push is on for lower-cost, broad-based investments. Additionally, following an ETF strategy can give advisors greater access to institutional-type diversification and portfolio management.

"Professional money managers are packaging portfolios of ETFs into investment strategies to meet a wide array of investor demands," Gogerty wrote. "And thanks to the continual development of individual ETFs they are providing access to both stand-alone investment strategies and one-stop, complete-solution offerings."

In recognition of this growing sector, Morningstar announced it has developed a proprietary tracking system for ETF managed portfolios. The system keys off of four main portfolio attributes-Universe, Asset Breadth, Portfolio Implementation and Primary ETF Exposure Type. (Due to a renewed interest in domestic strategies, the report showed that U.S. Equity offerings are the largest tracked Asset Breadth group with more than $21 billion in assets.)