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Active ETFs are on the verge of reaching a historic milestone, with assets quickly approaching the $1 trillion mark, according to the latest State Street Global Advisors Flash Flows report.
The rapid growth of money flowing into active exchange-traded funds shows a major shift in how institutions and individuals build portfolios, with the approaching $1 trillion mark representing a key moment for the investment management industry.
A Milestone for Active ETFs
"Right now, active ETF total assets are just $15 billion away from $1 trillion—a notable milestone that is likely to be achieved before St. Patrick's Day," noted Matthew Bartolini, head of Americas ETF research at State Street Global Advisors.
The broader ETF industry is also experiencing unprecedented growth, with February inflows reaching a record $111 billion, 185% above the February average, according to the report.
Active ETFs specifically saw record inflows of $44 billion in February, accounting for 40% of all ETF flows, according to State Street. This impressive figure was bolstered by record active equity inflows ($22.5 billion) and active fixed-income inflows ($17.7 billion).
Fixed-income ETFs led the charge with a "record-setting" $42 billion in February inflows, according to the report, representing a 2% increase of start-of-month assets. This outpaced equity ETFs' $62 billion inflow rate of 0.73% and demonstrates the growing secular usage of bond ETFs in investor portfolios.
Beyond Traditional Strategies
The record active flows showed remarkable depth, with more than 70% of active funds experiencing inflows in February compared to just 63% of all ETFs. February marked the 59th consecutive month of inflows for active ETFs, according to the report.
Within active equity, derivative income ETFs had a record $5.8 billion of inflows, while defined-outcome ETFs attracted $1.4 billion, their eighth-highest monthly total and 51st consecutive month of inflows.
State Street's projections suggest active fixed-income ETFs could take in over $200 billion for the year, potentially doubling the record set in 2024. If market returns remain supportive, total assets under management in active bond ETFs could surpass $500 billion by year-end.
With over $200 billion of inflows through the first two months of 2025, ETFs are on pace for $1.5 trillion of inflows for the full year, based on State Street's projection that accounts for seasonality and recent trends.