The level of exchange-traded fund (ETF) assets within unified managed account wrap programs has outpaced traditional mutual funds in four recent quarters.

Unified managed account programs are projected to reach $324.7 billion by 2012, and ETF use to grow extensively within the UMA market, according to a new research report from Cerulli Associates.

Unified managed accounts, unlike other wrap programs, allow for a mix of separate accounts, mutual funds and ETFs.

The level of ETF assets in wrap programs is still relatively small, says Cerulli. That had reached $18.4 billion across all wrap account types by the end of June.

In the UMA market, the overall level of assets from ETFs jumped from 11.6% at the end of 2006 to 13.2% through the second quarter of 2008, according to Cerulli. And during that time period, ETFs had more in UMA assets than mutual funds:

*Assets in $billions

Source: Cerulli Associates

Emily Tillman, a Cerulli analyst, said the ETF numbers have been helped by the introduction of newer UMA program players featuring a higher concentration of ETF use.

While in 2006 only six out of the 10 largest UMA platforms used ETFs, at the end of 2Q, eight out of the 10 largest UMA programs featured ETFs. Genworth ranked third among all UMA sponsors; Curian Capital ranked fourth; and Lockwood ranked eighth among the top 10 UMA sponsors, at the end of 3Q 2008, according to Cerulli.

"Advisors are using ETFs to build out more-sophisticated international allocations in UMAs," Tillman said.

The Cerulli projection that UMAs will grow to $324.7 billion by 2012 is based on an overall wrap market estimate of $3.15 trillion.

The current breakdown of all wrap products and asset levels from Cerulli is below:

*Assets in $billions

Source: Cerulli Associates