Blending index-based investments like ETFs with active management strategies can offer a number of benefits, including reducing overall costs versus an all-active portfolio and improving benchmark tracking. For many investors, blending takes the form of a "core/satellite" portfolio. For example, large-cap domestic equity is implemented with ETFs, and active management is used for "satellite" investments with higher return and risk profiles.

Investors may even choose to blend index and active within a single asset class. Having part of an asset class allocated to an ETF frees up the investor's active manager(s) to dial up their risk exposure in pursuit of greater returns while keeping the portfolio in line with the investor's risk/return objectives. Investors seeking to be closer to their asset allocation targets can incorporate index tracking ETFs alongside active managers, particularly if the active managers "drift" from their stated styles.