ETF Market Update: Hot Summer Chaos Edition

Active, International & Weird rule the roost

Sitting at about the halfway mark in 2025, it’s a good time to take stock and look at a lot of charts to see where the action is. First, here’s the quote:

The ETF Market in 2025 remains on fire. Net-new assets from launches and organic growth are $556 billion at the 6 month mark, bringing the total to $11.5 Trillion. In just the second quarter we’ve had 215 new ETFs came to market with a total of $7.6 Billion and a shockingly high median expense ratio of 0.715.

But! The discrepancy between who’s gaining assets, and who’s making money has become stark. Flows remain dominated by cheap beta this year, with <10 bps products continuing to get more than 46% of the flows, and >80bps products pulling just 5% of new assets. Revenue is a different story. The cheap bucket’s new flows imply just 8.9% of the new $1.2B in annualized revenue that flow will generate, while new products over 80 bps will grab 26.6% of the pie.

Meanwhile, active management and international funds are having their best years in ages.
- Dave Nadig, Independant ETF Expert

Flow Time

Let’s get under the hood (Note, all charts and tables should be interactive through column headings or tabs, and where there’s excess data, you should now be able to expand it or search.)

Here were my “huh” and “aha!” thoughts from this

• While we’re far from 50/50, this is as close to parity in terms of flows between Active and Passive as we’ve really ever seen. Even in U.S. equities— the stalwart domain of indexing — we’ve had 30% of flows go into active funds.

• In Bonds, Active is becoming dominant in terms of flow.

• Non-traditional (where most options, income and weird products live) has slowed its roll a bit. The first quarter saw more than $10mm a month in flows into these things. Now it’s about half that.

• If you’d told me we’d have $146 billion in crypto ETFs two years ago, I would never have believed you.

Zooming in

The most useful “buckets” for thinking about the ETF market I’ve found are the Factset/ETFAction “Category” buckets, which are about 100 common ways of slicing up exposure.

Looking recently, Large Cap equities in a few varieties dominate, but this has been true forever. Sort by AUM and you’ll see the three Large Cap US style boxes with a massive 2.5B in assets out of an 11T market. What stands out to me?

• Gold, Crypto and Synthetic income continue to draw big flows month to month. This is pretty clear anti-S&P positioning to me, but none of it’s nearly large enough to dwarf the endless bid for US stocks.

• Type “small” in the search bar on that table. Everyone still hates small cap value, but broad and growth oriented small caps seem to be breaking their long term losing streak. YTD, small caps are about flat, but there’s been a big shift from US to Ex-US broad exposure, and from Value to Growth in US exposure.

• Health Care, Consumer Cyclicals and Energy — despite speedrunning WW3 in June — are the most hated sectors, with over $10B in outflows so far this year between them. I can’t even begin to predict energy prices, health care policy or retail demand, but investors are voting with their avoidance.

Below the fold: another 2000 words and a pile more data on new launches, and a deep dive on who’s actually making money as an ETF issuer these days