Financial advisers who have been won over by exchange-traded funds because of their tax efficiency and flexibility, have over the years gradually swapped out of traditional mutual funds in favour of the low-cost investment vehicle.

Now, however, some advisers have forsaken mutual funds and are using ETFs – baskets of securities that are designed to track indices and trade like stocks – exclusively. Advisers say they switched after years of frustration with active fund managers who failed to out­perform their benchmarks, and the high expenses and costs linked to mutual funds.