Financial advisors are projected to ­increase their clients’ portfolio allocation to ETFs to 7.8% in 2013, according to Cerulli’s Exchange-Traded Fund Markets 2013 report. This is modestly up from 7.1% two years ago.

“This is notable because growth has been stagnant in previous years,” said Alec Papazian, associate director in Cerulli’s asset management practice. The report also identified major opportunities for ETF providers to grow their businesses.

The study emphasized the importance of product diversification in less crowded ETF categories. For example, there are more domestic stock ETFs compared to any other type of fund. ETFs focused on other investment categories like international bonds and stocks could be an area of asset growth.

Within the actively managed ETF space, fund providers need to focus on outstanding performance and efficient distribution. Cerulli finds that these factors have contributed to the success of traditional mutual funds and can be imitated. In a separate survey of 1,000 professionals, IndexUniverse and Brown Brothers Harriman examined how advisors choose ETFs and which ETF providers have the best reputation for quality products.

Among the report’s findings are: 50% of respondents say the index brand is of equal or greater importance to the ETF brand; and 53% of respondents say they would pay at least six extra basis points for an ETF with a “brand-name index” covering emerging markets.

The IndexUniverse/Brown Brothers Harriman survey also found that an ETF’s strategy is the most important factor when selecting an ETF whereas trading spreads are the least. Finally, 41% of advisors expect to increase their clients’ allocation to equities in the next six months versus just 6% who plan to lower it.