As advisers adopt ETFs, the shift from actively managed mutual funds to passive ETFs and index funds has sent mutual fund companies scrambling[MK1] to figure out what they must do to staunch the bleeding and regain their market share.

Yet as advisers eliminate third-party managers — and instead try to add value by becoming the investment portfolio managers themselves — the rise of ETFs appears to be not so much a shift from active to passive, but simply a recognition that when advisers build investment portfolios, we prefer to do it using ETFs as our building blocks.

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