The US exchange-traded fund market has surged past $11 trillion in assets, setting a new high-water mark amid a year of rapid inflows, robust product launches, and a growing embrace among financial advisors.
According to Cerulli Associates, the industry attracted $511 billion in new money during the first half of 2025, building on the momentum of last year’s record $1 trillion in inflows.
Advisors are playing a central role in this expansion. Cerulli’s research finds that more than half of asset managers see increased advisor allocations as a major driver of ETF asset growth, while another 48% consider it a contributing factor.
The shift is evident in portfolio construction: advisors reported allocating 21.6% of client assets to ETFs in 2024, nearly double the share from a decade earlier. By 2026, that figure is expected to reach 25.5%, surpassing mutual funds for the first time.
The wirehouse and independent RIA channels have been at the forefront of ETF adoption, together accounting for more than half of retail ETF assets. RIAs, in particular, have leveraged ETFs as cost-effective building blocks for portfolio management, and their openness to new products has helped fuel the trend.
“The independent RIA channel has been pioneering the use of ETFs, thanks to demand for low-cost beta building blocks when assembling client portfolios,” said Kevin Lyons, senior analyst at Cerulli Associates.
The ETF boom is not limited to passive index strategies. Actively managed ETFs crossed the $1 trillion threshold in assets during the second quarter, with more than 420 new funds launched in the first half of the year – most of them active strategies.
Fixed-income ETFs have also seen significant growth, now approaching $2 trillion in assets after a 12% increase since the end of 2024. Advisors are increasingly comfortable using ETFs for bond exposure, with the category adding $172.6 billion in the first half of 2025.
More boradly, recent regulatory changes are expected to accelerate the pace of innovation and product launches. The SEC’s moves to allow ETF share classes of mutual funds and to fast-track commodity-based ETF listings could open the door to thousands of new products and expand ETF access within retirement plans.
The competitive landscape is also intensifying as issuers race to differentiate themselves.
“The record pace of expansion underscores the industry’s vibrancy, but also reflects intense competition,” said Eric Balchunas, senior ETF analyst at Bloomberg Intelligence adding that asset managers will need to stand out through lower costs and specialized strategies as the market gets saturated with more products.
For advisors, the growing menu of ETFs offers more tools to meet client needs. A quarterly snapshot report from AdvizorPro last month shows that nearly three-fifths of RIAs expanded their ETF holdings in the second quarter, with digital assets, technology subsectors, and global bonds among the fastest-growing categories.
"ETF adoption among RIAs is broadening across both defensive and growth-oriented strategies," AdvizorPro said in its Q2 2025 ETF trends report focused on the RIA channel. "Advisors are more discerning in their selections, but the overall trend remains one of expansion."
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