Financial advisors navigating explosion of actively-managed ETFs

ARTICLE SUMMARY

1. Surge in active ETF offerings and inflows
   Active ETFs now represent roughly 51% of the almost 4,300 U.S.-listed ETFs—up from 23% in 2020—and have more than doubled in number over the past five years. Despite accounting for just 10% of total ETF assets, they have captured a record share of the $462 billion in ETF inflows during 2025

2. Volatility and macro uncertainty driving demand
   Advisors report that heightened market volatility—driven by trade tensions and shifting Federal Reserve policy in early 2025—has underscored the limitations of passive strategies, prompting a shift toward active and outcome‑oriented ETFs for dynamic risk management and return enhancement.

3. Rise of thematic and outcome‑oriented strategies
   Outcome‑oriented ETFs employing options‑based buffers, commodity ETFs (e.g., gold), and inflation‑hedging TIPS funds are gaining favor for their tailored downside protection and income‑seeking profiles, allowing advisors to align products with specific client objectives.

4. Importance of careful evaluation amid growing complexity
   With a proliferation of strategies—from low‑cost passive replicas to fully active and defined‑outcome vehicles—advisors stress the need to assess each ETF’s investment approach, underlying holdings, construction methodology, and potential overlaps to avoid unintended concentration or risk mismatches.