2025 U.S. ETF Market Shift: Active ETFs Surpass Index ETFs in Count, AUM Nears $1.5T

The U.S. ETF market witnessed a landmark shift in 2025, as highlighted in a Seeking Alpha report [1] published on December 24, 2025. By December 18, 2025, active ETF AUM reached $1.49 trillion (projected to surpass $1.5 trillion by year-end), and the count of active ETFs (2,682) exceeded index ETFs (2,174) for the first time. This milestone follows a year of record inflows, with active ETFs capturing 10.81% of total U.S. ETF assets by December 2025—up from 8.38% in 2024 [5]. The growth reflects investor demand for active management strategies combined with ETF structural advantages (liquidity, tax efficiency, intraday trading), particularly amid potential market volatility [3].

Medium- to long-term implications include diversification of the ETF market beyond traditional passive roots, as 83% of new ETF listings in 2025 were active, with fixed income active ETFs driving 38% of total fixed income ETF inflows ($146 billion) [4]. This trend is likely to increase competition in the asset management industry, as traditional mutual fund managers continue to migrate to the ETF structure. Global active ETF AUM reached $1.86 trillion in November 2025, with the U.S. accounting for ~80% of these assets [7].

1. Structural Synergy Drives Growth
   : The shift toward active ETFs stems from the combination of ETF structural benefits and investor appetite for active alpha generation, not just performance alone. A BBH 2025 survey found that 33% of investors plan to reallocate passive funds to active ETFs over 12 months, driven by alpha search and volatility navigation [2].
2. U.S. Market Dominance
   : The U.S. accounts for the majority (~80%) of global active ETF assets, indicating a more mature adoption of active ETF strategies in the region compared to international markets [7].
3. Fixed Income Leadership
   : Fixed income active ETFs emerged as a major growth segment in 2025, capturing $146 billion in inflows (38% of total fixed income ETF inflows), highlighting investor demand for active management in fixed income markets [4].
4. Information Gaps
   : Critical data is missing, including asset class breakdown of active ETF AUM, 2025 fee comparisons to index ETFs, viability of low-AUM active ETFs, and 2025 performance relative to index ETFs [5].

1. ETF Closure Risk
   : With over 2,682 active ETFs, many with low AUM, closures are likely, potentially leading to forced redemptions and tax implications for investors [5].
2. Fee vs. Performance Concerns
   : Active ETFs typically charge higher fees than index ETFs; if active strategies fail to deliver consistent alpha, higher fees could erode long-term returns [2].
3. Volatility Dependence
   : Growth is partially driven by investor demand to navigate volatility; a return to stable market conditions could reduce interest in active ETFs [3].
4. Regulatory Scrutiny
   : Increased regulatory oversight of ETFs (e.g., liquidity requirements, transparency) could impact active ETF growth [8].

The growth of active ETFs presents potential opportunities for asset managers to expand active offerings with ETF structural benefits, and for investors to access active strategies with enhanced liquidity and tax efficiency. However, these opportunities are subject to the resolution of fee-performance and regulatory concerns.

• U.S. active ETF AUM: $1.49 trillion (Dec 18, 2025), projected to reach $1.5 trillion in 2025 [1].
• Active vs. index ETF count: 2,682 vs. 2,174 (U.S.) [1].
• Total U.S. ETF AUM: $13.38 trillion (Dec 17, 2025) [6].
• Global active ETF AUM: $1.86 trillion (Nov 2025) [7].
• Fixed income active ETF inflows: $146 billion (38% of total fixed income ETF inflows, 2025) [4].