Active ETFs Break $1 Trillion, But Most Funds Lag Behind

However, digging deeper, the active ETF boom isn’t as torrid as it would appear.

It turns out that only a small number of active ETFs have gathered any significant assets, while most are running on empty tanks and fumes. The largest funds may be skewing the average. While this is not necessarily bad, it is something to consider when selecting an active eTf for your portfolio.

When active ETFs launched back in 2008, they seemed like a novelty. There were only a handful of funds and performance was mixed when compared to the numerous index ETFs starting to be launched. However, thanks to SEC regulation changes under new Rule 6c-11, the growth of semi- and non-transparent structures, and mutual fund-to-ETF conversions, the number of active ETFs has exploded- going from niche to mainstream portfolio building tool.

By the end of 2024, there were over 1,800 active ETFs on the market. Today, the number of active ETFs on the market exceeds the number of passive ones and more than $1 trillion in investor assets are tucked away in actively managed ETFs.

The reasons for the surge have been vast.

Ultimately, investors of all sizes and stripes- as well as financial advisors- have looked to the ETFs benefits such lower costs, tax wins, and intraday tradability, to build their portfolios and achieve additional alpha from their investments. As such, active ETFs continued to be added to portfolios and models with gusto.

While pundits and Wall Street have been quick to praise the growth of active ETFs, the truth is a little bit murkier. Not all active ETFs have been winning on the asset front. In fact, it’s quite the opposite. That’s the gist according to a new Broadridge Financial report on the state of active ETF fund flows.

According to the financial data, market maker, and proxy firm, the number of active ETFs with any real assets is a vast sliver of the total. Assets in active ETFs have grown by over eight-fold over the last five years. Increasingly though, those assets continue to flow into just a few issuers and a few key top funds.

Broadridge’s new report

All in all, the list of the top ten largest active ETFs is dominated by J.P. Morgan, Dimensional, Aventis, BlackRock, and Capital Group.

You can see the success when it comes to fund flows as well. Broadridge’s research shows that only a few active ETFs managed to gather a significant sum of assets after their first year of existence. Just take a look of this chart. Less than 11% of all active ETFs gather more than $100 million in their first year and those that do managed to claim the loin’s share of all active ETF inflows over time.

_Source: Broadridge Financial _

According to Broadridge, there are some trends that show why this success happens. For one thing, robust distribution, particularly within registered investment advisor channels, internal models, and bring-your-own assets have helped.

For example, J.P. Morgan has been able to leverage its own advisor, private bank and clients to help build a dominant active ETF line-up. A successful mutual fund-to-ETF conversion program has also helped instantly, creating a huge base of assets. Similarly, BlackRock has been able to grow its active ETF program quickly by using its funds within its model portfolios. For example, over the last two years, BlackRock added the iShares Flexible Income Active ETF, iShares Dynamic Equity Factor Rotation ETF, iShares High Yield Muni Active ETF and iShares U.S. Thematic Rotation Active ETF to its model portfolios. All of these ETFs now hold billions of dollars. Fidelity has found success with its active ETFs and its retail clients.

Broadridge also highlights the fact that the most successful active ETFs aren’t just traditional stock picking. They all offer something else. Something special. This can include systematic exposure to bonds or equities, enhanced option/derivatives plays, new strategies like factor rotation or sector exposure, or operating within the world of fixed income. After years of underperformance to indexing, investors are still wary of traditional active management in the world of stock picking. Broadridge’s data shows that many of these sorts of funds still fail to capture inflows versus more exotic active ETF fare.

Finally, costs still play a major role in investor inflows and active ETF success. Many of the largest and most successful active ETFs still tend to be very cheap- with some costing less than index funds in their category. Economies of scale allow these large funds to still operate for pennies on the dollar. And thanks to the low-cost mantra of indexing, investors still flock to these lower-fee active funds.

Overall, fund flows into active ETFs show a different picture than what the broad headlines show.

So, what does it mean for investors and advisors? The success of some asset management families and funds does have some impacts on a portfolio. And we can see those impacts when it comes to indexing and index ETFs.

At the end of the day, the bigger the ETF, the easier it is to trade. Higher trading volumes reduce big-ask spreads and enhance liquidity on the secondary market. This is especially true with regards to active ETFs that use semi-transparent and non-transparent structures. Tight bid-ask spreads and investor demand does help reduce costs.

Secondly, the larger the fund is, the less chance of a closure. While ETFs are low-cost, they aren’t free to run. Asset managers need to charge enough to break even on operating costs. And because ETFs don’t charge as much for fees as mutual funds or other investment vehicles, they require scale to meet their break-even points. Morningstar suggests that more than 40% of all active ETFs are at risk of closure because they simply aren’t breaking even on their costs. Larger asset managers -BlackRock, Capital Group, Fidelity -already have plenty of built-in scale.

With that in mind, investors and advisors building portfolios and using active eTFs may want to stick with the big boys, just like they would when it comes to indexing. While there is no hard and fast rule on fund size, those with some scale behind them have a greater chance of staying open and providing low costs to portfolios. Moreover, those managers with large active ETF franchises are willing to keep a smaller fund open until it gains scale.

These ETFs are sorted by their YTD total returns, which range from -2.7% to 7.8%. They have expense ratios between 0.17% and 0.36% and assets under management between $5B and $30B. They are currently yielding between 0.8% and 9.7%.

Overall, active ETFs have quickly become a great way for many investors to build their portfolios. However, not all active ETFs have experienced the same level of success as the headlines would suggest. Like indexing, a few dominant players are starting to emerge, capturing most of the assets. For investors, this is significant when it comes to costs and potential outcomes. Choosing the largest funds could make a ton of sense for portfolios.

Active ETFs have continued to gather billions in assets. But only a few funds are dominating those fund flows. For investors, these active ETFs could be their best bets, offering lower costs and reducing closure risks.

¹ Broadridge Financial (June 2025). Active ETFs: Achieving escape velocity