Advisers' education in ETF portfolio construction is laying the groundwork for increased use of alternative mutual funds, according to new research from Cerulli Associates.

Cerulli has claimed research has shown that ETF providers as a group havedone well by promoting the ease of use of ETFs, as well as educating advisors, and offering tools that facilitate ETF usage in client portfolios. It stated that asset managers have an opportunity to build upon this educational groundwork in order to expand the use of mutual fund alternatives, which have garnered positive flows this year.

ETFs have demonstrated tremendous growth over the past five years but then slowed down during recent months. ETF assets topped $451 billion as of February 2009.

Cindy Zarker, director and lead author of the recent report, Alternative Investments in the Retail Marketplace: Evaluating Opportunities and Growth, said: "The style-box approach had already lost some of its luster among advisors following the last bear market. At the end of 2008, nearly one-third of mutual fund assets were in funds that do not fit into style boxes, compared with less than one-quarter of assets in 2000."

She said the severe market downturn was compelling advisers to reconsider conventional wisdom about diversification and buy-and-hold approaches, and sparking advisers' interest in certain types of alternative investments and ETFs.

Strategies and asset classes that were once the exclusive domain of institutional and ultra-high-net-worth investors are increasingly available to retail investors. Previously, access to investments in gold, for example, was limited to those able to transport and store gold bullion.