ETFs Defying Gravity: 2025 Flows Surpassed the $1 T Mark
Active ETFs have helped drive record-breaking flows with an organic growth rate five times that of passive ETFs¹, demonstrating client demand for lower cost, tax-efficient strategies and the potential for better results.
Key Takeaways
Active ETF year-to-date flows of $378 billion have exceeded all prior annual figures.¹
ETF flows of $1.09 trillion in the first 10 months of 2025 are on pace to surpass 2024 flows of $1.1 trillion.¹
Fixed-income ETFs are growing at twice the rate of equity ETFs, representing nearly $2.19 trillion in total assets.¹
By nearly every measure, 2025 is on track to be another record-breaking year for the U.S. exchange-traded fund (ETF) industry¹ on the back of strong equity and fixed-income markets.
Active ETFs—Where the Money Is Going
Active ETFs are clearly playing a crucial role in the overall growth of the ETF industry. Since American Century Investments entered the ETF market in early 2018, the assets under management (AUM) of active ETFs in the U.S. have grown from less than $50 billion to over $1.3 trillion.¹
The surging demand for actively managed ETFs shows clients’ growing preference for strategies that combine the lower costs and tax efficiency of ETFs with the potential for better returns as well as risk management.
Notably, new inflows have been a stronger driver of growth for active ETF AUM than market appreciation. The organic growth rate1 for active ETFs tops 42% in 2025—over 5x the growth rate of passive ETFs.
Holding only 10% of market share, active ETFs accounted for approximately 35% of new net flows in 2025.
Outpacing the prior record set in 2024, net flows directed toward active ETFs so far in 2025 total $378 billion.1
Issuers have launched over 800 new ETFs in 2025 with 86% being actively managed.1 There are now more active ETFs than passive products available for clients to add to their portfolios.
Issuers have launched 120 fixed-income ETFs this year, 76% of which are actively managed. With this surge, active fixed-income ETFs now outnumber their passive counterparts by about 150 funds.
Securities and Exchange Commission (SEC) Rule 6c-11 created a streamlined launch process and consistency among ETF issuers. The rule allows active managers to use optimized and custom or negotiated in-kind baskets for ETF creations and redemptions, which is believed to further enhance the tax efficiency of active ETFs. The rule also provides more transparency to investors by requiring firms to provide historical premiums, discounts and bid/ask spread information on their websites.
4th-Largest Active ETF Issuer—A Leader in Active ETFs2
Ranking 13th among all U.S. ETF issuers in assets under management, American Century Investments manages over $90 billion.2 We offer investors investment capabilities across a broad range of asset classes and styles. Our lineup of ETFs is designed to offer investors varying levels of active management, leveraging both in-depth fundamental research and advanced quantitative methodologies. ETFs broaden your toolkit for managing portfolio risk, reducing fees and taxes and enhancing return potential.
We continue to see demand from investors for our range of low-cost, well-designed ETF strategies. Core offerings, particularly in international and emerging markets equities, as well as small-cap value managed by our Avantis Investors® team, have been key areas of growth. Additionally, our diversified growth equity strategy has resonated with investors seeking options to diversify their exposure to the U.S. equity market concentration.
See our full lineup of ETFs.
Investors Are More Committed to ETFs Than Ever
Investors continued to pour assets into ETFs to diversify portfolios and capitalize on market trends.
The U.S. ETF market is now over $13 trillion in assets under management.
Year-to-date ETF net flows have surpassed $1 trillion and are on track to exceed the 2024 high-water mark of $1.1 trillion.
ETF flows in 2025 hit record highs, with October seeing $166 billion in inflows—the largest monthly total ever.
ETFs represented 33% of the total managed fund industry at the end of 2024 and now represent 37%.3,4
Six months of the current calendar year have recorded net flows exceeding $100 billion—a record, as the previous maximum was five months.
Fixed income, leveraged options, alternatives and digital assets saw sizable inflows.
It may be surprising to those who still associate ETFs with passive equities that some of the strongest growth rates in 2024 and year-to-date 2025 are attributed to active strategies, including active fixed income.
Spotlight: Fixed-Income ETFs Soar to Record Highs
The equity market continued to exhibit significant and persistent strength over the last two years. However, heightened macroeconomic and geopolitical uncertainties, as well as U.S. equity market concentration and relatively high yields, have led investors to turn to fixed income as a portfolio ballast and income generator in 2025.
Year-to-date fixed-income ETF flows have increased to a record high as the market anticipated possible Federal Reserve (Fed) rate cuts. Investors primarily chose shorter- to intermediate-duration bonds and active management strategies. American Century Investments understands the importance of returns and income to investors’ financial security, especially during volatile markets. Our active fixed-income ETFs aim to capitalize on inherent inefficiencies in the bond market, thereby exploiting opportunities while managing risk.
Learn more about our Active Fixed-Income ETFs.
Investor expectations of a Fed rate cut in September contributed to fixed-income ETFs achieving record flows this year. Investing beyond benchmark constraints with ETFs allows active bond managers to expand performance potential while pursuing cost efficiencies. Greater flexibility enables active portfolio managers to respond to market volatility and manage risks.
Active fixed-income ETFs represent 39% of total cash flows this year, reflecting a growing preference among investors for active management.
Attracting over 31% of all ETF flows, fixed-income ETFs represent nearly $2.19 trillion of the $13.03 trillion in total ETF assets, which is approximately 17%.1
Surpassing last year’s $294 billion record, flows into fixed-income ETFs are $344 billion through October.
Achieving an organic growth rate of roughly 20% in 2025, fixed-income active ETF strategies saw flow rates above 60%.1
Still Room to Grow—New Ways for ETFs to Take Flight
As ETFs increasingly become the preferred investment vehicle, they are also becoming a hub for innovation—both in terms of an ever-expanding investment universe, such as the most recent launches of spot Solana and other digital assets, and structural innovations.
This year, over 40 mutual funds converted to ETFs, totaling $29 billion in assets,1 as managers sought to transform existing funds to better meet investors' preferred investment vehicles. Days before the government shutdown, the SEC took the historic step of approving one of the dozens of filings seeking exemptive relief for mutual funds to offer an ETF share class. While the infrastructure underlying the dual share class structure is still in development, it has the potential to be another accelerator of ETF asset growth and launches in the coming quarters.
Year-End Tax Tips to Help You Transition to ETFs
During the final weeks of the calendar year, investors can consider a few steps to help manage taxes through a portfolio transition to ETFs:
Consider delaying purchases of funds with large, estimated distributions until after the payout.
Consider electing not to reinvest dividends on funds with large, estimated distributions to enable reinvestment in more tax-efficient offerings.
Depending on the overall gain scenario, consider selling a fund with large, estimated distributions prior to the dividend date and reinvesting the proceeds in a more tax-efficient offering.
Consider tax-loss harvesting opportunities if losses exist that can be realized to offset realized gains.
Authors
Head of ETF Product and Strategy
Active ETFs from American Century Investments®
Our active ETFs don’t follow traditional thinking—they expand it.
¹ ETF assets and flows as of October 31, 2025. Source: Morningstar Direct.
² Source: Morningstar data out of 387 ETF issuers overall and 343 active ETF issuers as of October 31, 2025.
³ Defined as 2025 net new flows divided by assets as of prior year-end.
⁴ Mutual fund assets are estimated as of September 30, 2025. Source: Morningstar.
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