He’s joined by Cinthia Murphy, Investment Strategist at Vetta-Fi, and Daniel Noonan of Cohen & Steers, who share their insights on what’s driving investor behavior and where the ETF market is headed next.

The Rise of Active ETFs

According to Murphy, active ETFs now account for 40% of all ETF inflows in 2025, with total active ETF assets surpassing $1 trillion. This signals a growing investor preference for active management strategies that can adapt to changing market conditions, especially amid ongoing volatility.

Crypto ETFs Dominate Headlines

Crypto ETFs, particularly those offering exposure to spot Bitcoin and Ethereum, remain one of the biggest stories of the year. The category has drawn over $32 billion in inflows in 2025 alone, driven by growing regulatory clarity and increased interest from both advisors and investors.

Diversification Beyond the Core

Investors are increasingly looking to diversify beyond traditional stocks and bonds. Non-traditional assets — including set allocation strategies, commodities, and crypto — have captured 12% of total ETF flows, despite representing a smaller share of overall assets. This shift reflects a broader response to market uncertainty and elevated equity valuations.

Under-the-Radar ETF Growth

Despite the spotlight on active strategies, Murphy says index and smart beta ETFs continue to quietly gain assets. Strategies focusing on quality, revenue-weighting, and factor-based approaches remain popular, although they’ve been somewhat overshadowed by the industry’s current active tilt.

Thematic and Alternative Investing Trends

Investor interest in AI, tech, and health innovation remains strong, fueling continued demand for thematic ETFs. Gold ETFs are also experiencing a standout year with record inflows in 2025, as investors seek a balance between growth potential and portfolio protection through alternative assets.

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