Active ETFs surge in ETF market boom: State Street
According to the latest installment by State Street Global Advisors, the global ETF market is on track to reach its historic milestone, which is projected to reach $2 trillion by the end of 2025. ETF Impact Report. This incredible growth is because aggressive management innovations and new asset categories change the way investors build their portfolios.
Active ETF As investors are looking for a more dynamic approach to navigate market uncertainty, the strategy moves rapidly from the periphery to the mainstream of their investment portfolio, earning 32% of all ETF flows. This shift to active management is prominent Bondsinvestors are looking for areas such as bank loans and secured loan obligations beyond traditional high-revenue options.
“The gap between adoption and opportunity suggests that ETFs are still early in evolution and that their role in portfolio construction is poised to grow further in the coming years,” wrote Anna Paglia, executive vice president and chief business officer at State Street Global Advisors, in the report.
Active ETFs are seeing extraordinary momentum, with global active fixed income ETF assets reaching $350 billion as of December 2024. The State Street Project will double this number by 2026 as investors are seeking real-time adjustments to changing market conditions.
“As the global central bank pivots from rate hikes to rate reductions, investors are reassessing bond positioning and leaning towards active ETFs for real-time adjustments,” wrote Michael Alone, Chief Investment Strategist of State Street Global Advisor, who co-authored with SPDR American American Research Director Matthew Bartolini. This trend spans global markets, with aggressive fixed income ETFs rising 33% in the Asia-Pacific region last year, with Europe’s inflow reaching $2 billion in 2024.
A yield search has catalytic growth in a special fixed income category. High-Yield Bond ETFS holds $118 billion in assets, while CLO ETF is rapidly expanding to $54 billion. By 2026, these securitized credit products are expected to collectively outperform traditional high-yield bond ETFs of total assets.
Digital assets and theme investments represent another major growth area. Global Crypto ETF assets rose 255% year-on-year to $127.7 billion in 2024 following regulatory advances.
meanwhile, AI-themed ETF It drives a record flow of subject investments that has collected $2.4 billion in the first two months of 2025. Almost half of these flows ($1.1 billion) came from ETFs that focus specifically on robotics and AI.