Insurers Find Greater Use for ETFs

Institutional investors are increasingly incorporating exchange-traded funds in their portfolios—one group of investors adopting ETFs are U.S. insurance general accounts. These investors held $49 billion in ETF assets as of the end of 2025, a 25% increase from 2024, according to data from S&P Global.

Approximately 37% of U.S.-based insurers used ETFs in their portfolios, according to S&P, and the number of ETFs they held grew to 768 in 2025 from 500 five years prior. While ETF allocations remain small relative to the more than $8 trillion held in U.S. insurance general accounts, ETFs are finding larger roles in insurer portfolios.

Invesco also reported, based on data from the National Association of Insurance Commissioners analyzed by S&P, that insurer adoption of ETFs is concentrated among larger firms.

“Large- and mega-sized [insurance general accounts] allocated less than 1% to ETFs, while small and medium-sized peers allocated roughly 1% to 2%,“ Invesco stated. “Even so, small- and medium-sized insurers represented only 20% of total ETF assets at IGAs in 2025, indicating that most ETF assets remained concentrated among large- and mega-sized insurers.”

ETF Use Cases in Insurance Portfolios

According to Invesco, insurers most commonly use ETFs for cash equitization, portfolio transitions, tactical allocations and increasingly as long-term strategic holdings.

“Insurers have used ETFs in short-term, tactical ways, often to manage cash flows and liquidity. Many IGAs have also used ETFs for longer-term allocations, particularly when they sought access to niche markets or complementary exposure alongside other institutional vehicles,” the report stated.

Garrett Glawe, head of asset owner ETF specialists at Invesco, pointed to the firm’s BulletShares fixed-income ETFs, which are designed to provide income and a defined maturity distribution like bonds, as an example of an investment product initially designed for retail and adviser channels that insurers are using to match portfolio duration to expected liabilities.

“BulletShares … are a series of fixed-income ETFs that are investment-grade or high-yield that all mature in the same year,” says Glawe. “We have had insurance general account clients use these BulletShares in that type of context. [If] you really need to target a certain duration to match up with your liabilities, you can use something like BulletShares that has a very specific duration profile to help in that process.”

Insurers are also turning to ETFs as an efficient access point for credit markets. According to Invesco, some firms use ETFs tied to collateralized loan obligations and senior loans as liquid implementation tools for exposure to those asset classes, while others employ them as temporary allocations while waiting for commitments to private credit strategies to be drawn down.

The growing use of ETFs also reflects changing market dynamics. With a small group of mega-cap technology stocks accounting for an outsized share of equity market returns in recent years, some insurers are using ETFs to diversify equity exposure and reduce concentration risk. Invesco’s report also noted that insurers are increasingly focused on risk-management implications stemming from the debt issuance used to finance the buildout of artificial intelligence infrastructure.

At the same time, insurers continue to use fixed income ETFs as a destination for excess cash, allowing portfolios to remain invested while both generating income and maintaining liquidity.