Active exchange-traded funds are poised to capture unprecedented market share in 2025, driven by rising investor demand for skilled portfolio management and superior performance relative to passive benchmarks. Industry leaders project a record inflow of $140 billion into actively managed ETFs this year.
- Active ETFs projected to attract $140 billion in net inflows in 2025, a 62% year-over-year increase.
- Active ETFs now hold 21% of total U.S. ETF assets, up from 16% in 2023.
- BlackRock’s IUSA ETF drew $18 billion in assets within its first six months of launch.
- Active strategies outperformed the S&P 500 by 1.8% annually on average in the first half of 2025.
- Institutional investors are increasing allocations to active ETFs due to improved risk-adjusted returns.
- The trend is driving innovation in trading infrastructure and fund manager technology adoption.
The year 2025 is emerging as a pivotal moment for active equity ETFs, with analysts forecasting a surge in assets under management fueled by investor confidence in professional stock selection. According to industry data, active ETFs are expected to attract $140 billion in net inflows during the year, a 62% increase from 2024's $86 billion, marking the highest annual inflow in the sector’s history. This shift reflects a growing preference for manager-driven strategies amid volatile market conditions and concerns over passive indexing limitations. The momentum is particularly strong in the U.S. equity space, where active ETFs have seen their market share expand to 21% of total ETF assets, up from 16% in 2023. Firms such as BlackRock, Vanguard, and State Street are launching new active products, including multi-asset and thematic funds targeting AI, clean energy, and healthcare innovation. BlackRock’s iShares Active U.S. Equity ETF (ticker: IUSA) has already drawn $18 billion in assets since its inception in Q1 2025, becoming one of the fastest-growing active ETFs in the past decade. This trend is also reshaping the competitive landscape. Passive ETFs, long dominant in terms of scale, now face intensified pressure as active strategies deliver average outperformance of 1.8% annually over the S&P 500 in the first half of 2025. Institutional investors, including pension funds and endowments, are reallocating portions of their portfolios toward active ETFs, citing improved transparency, lower tracking error, and better risk-adjusted returns. The broader implications extend to liquidity, trading volumes, and fund manager compensation models. As active ETFs grow in size and influence, exchanges are adapting their systems to accommodate higher trading activity and more complex pricing mechanisms. Meanwhile, asset managers are investing in AI-driven analytics and real-time risk monitoring to maintain an edge in a market where performance differentials are increasingly scrutinized.