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2025: When ETFs Stopped Being‘ Passive’
The playbook for these funds has been rewritten by crypto and thematic strategies … and( of course) by active management.
By Ron DeLegge
THE EXCHANGE-TRADED FUND INDUSTRY DIDN’ T just grow in 2025— it smashed through barriers. Whether it was the long-anticipated rule changes affecting crypto funds or the flood of actively managed strategies, it was a milestone year for ETFs.
“ 2025 was about record everything: Record ETF flows, record launches and record volumes,” says Paul Baiocchi, a CFA and the head of fund sales and strategy at SS & C ALPS Advisors.
With more than $ 12 trillion in U. S. assets, the ETF market experienced a flood of first-time ETF issuers. Some of these newbies arrived with product innovations while others emerged hoping to take advantage of dramatic regulatory changes. In both cases, the end result further cemented ETFs as the dominant portfolio building blocks for both retail and institutional investors.
Let’ s examine some of 2025’ s ETF highlights and look ahead to 2026.
Greater ETF Adoption
The wild ride in financial markets provided more proof about the integral role of ETFs in client portfolios. In April 2025, the SPDR S & P 500 ETF Trust( SPY) traded more than $ 126 billion in a single day, establishing an all-time trading volume record in the ETF market. An impressive stat demonstrating the continued adoption of ETFs by advisors, retail investors and institutions.
Meanwhile, Schwab Asset Management’ s 2025“ ETFs and Beyond Study” found that investors’ shift to all-ETF portfolios is accelerating. According to Schwab, an incredible 66 % of current ETF investors had begun investing in their funds just within the past five years, which demonstrates the significant momentum of the products. And half of those investors( 50 %) believe they could be fully invested in ETFs within the next five years. Forty-nine percent of the survey respondents agreed that ETFs with niche or targeted strategies have a place inside portfolios.
34 | FINANCIAL ADVISOR MAGAZINE | DECEMBER 2025 WWW. FA-MAG. COM