Younger investors are more likely to use passive strategies, new research has shown.
Figures from Platforum showed investors under 40 held ETFs and tracker funds in greater numbers than their counterparts aged 65 or over.
It also showed the actual size of the portfolio and the household income of the investor had little bearing on whether the investment strategy was active or passive.
According to Platforum, 10 per cent of the assets on adviser and direct platforms were held in passives, with 9 per cent in tracker funds and 1 per cent in ETFs.
In contrast, direct-to-consumer investors only hold 8 per cent of assets in passives on direct platforms but with a higher proportion in ETFs, with just 5 per cent of assets in tracker funds and 3 per cent in ETFs.
Miranda Seath, Platforum's research director, said: "Advisers continue to use tracker funds more extensively than ETFs. Our research suggests that advisers are using tracker funds as building block funds in portfolios to bring down the cost of investing or for diversification.
"Most advisers are blending active and passive funds within portfolios. We have seen little year-on-year increase in ETFs on platform. Many advisers continue to see the ETF structure as higher risk than mutual funds, citing liquidity concerns as a barrier to investing."
The figures showed large advice firms are more likely to recommend passive investments than their smaller counterparts. Every firm with more than £500m under management or 10 RIs used passives in some capacity, while only 6 per cent of advisers have clients without any passives in their portfolios
The study also found advisers who use ETFs have a more diversified portfolio. They were more comfortable than other advisers with holding such investments as directly-held securities, investment trusts and VCTs and EISs in portfolios.
More than two-thirds of advisers did not recommend exchange traded products, but Platforum's research found advisers were more likely to recommend ETFs in the next 12 months than they were in 2016.
Patrick Connolly, a chartered financial planner at Chase de Vere, said: "It is understandable that younger people hold more passive investments. They are a good option for those who are starting out with investing and are looking for broad asset or market exposure at a low cost.
"Older investors could be more likely to believe, rightly or wrongly, that they can pick active funds that will outperform or have a financial adviser who is more likely to recommend active investments."
