The exchange-traded fund (ETF) industry is on track for a record-breaking year in 2026, following a strong 2025. Over $1 trillion has already been invested into ETFs this year, with trading volumes also projected to reach new highs. This puts the industry within reach of a "triple crown" of record inflows, launches, and trading volumes.
Goldman Sachs Global Banking & Markets projects U.S.-listed ETFs to attract over $2 trillion in investments this year, representing a 40% increase over 2025. This surge is partly driven by the rapid expansion of more sophisticated funds and the evolution of the "ETF wrapper" beyond passively tracking market indexes. Product innovation plays a key role, with more than 1,100 new ETFs launched last year, and 2026 expected to break that record, potentially bringing the total number of listed ETFs in the U.S. to over 6,000, surpassing the number of single stocks.
Actively managed ETFs are significantly contributing to this growth, accounting for over 35% of the inflows this year, despite comprising only about 13% of the $16.1 trillion in assets under management in U.S.-listed ETFs. Institutional investors are increasingly using these active funds for portfolio construction and management, seeking to outperform benchmarks and rebalance portfolios. Advanced active management strategies, including leveraged funds, innovative fixed-income offerings, and structured derivatives, are now being expressed within the ETF framework.
While active strategies are gaining traction, low-cost, core, passive ETFs still capture a substantial portion of inflows, with one in every two dollars going into these foundational products. Advisors view both passive and active ETFs as complementary tools, using passive funds for broad market exposure and diversification, and active funds for specific outcomes like income generation or risk management. The growth of third-party model portfolios, which saw a 46% increase in ETF assets to $950 billion in the last 12 months, also highlights the increasing use of ETFs for multi-asset strategies.
The ETF market is also demonstrating its utility during volatile periods. Daily notional trading volume averages around $320 billion, and during times of market stress, ETFs can account for up to 40% of trading activity. Investors are using ETFs for hedging and rebalancing, with notable sector shifts like semiconductor ETFs receiving over $19 billion in June, while software ETFs saw outflows of roughly $1.9 billion. This dynamic indicates how investors leverage ETFs to manage volatility and scale liquidity across their portfolios.
