Increasing investor preference for actively managed strategies continues in this year’s tumultuous environment. With active ETFs taking increasing market share, advisors and investors have ever-expanding choices when looking to augment existing passive exposures.
Track Insight recently conducted their annual Global ETF Survey for 2025, with support from S&P Dow Jones and J.P. Morgan Asset Management. The survey tracks ETF trends, investor demand, and an overview of the current ETF industry. Featured prominently was the rising star of active ETF demand and offerings. Assets in active ETFs worldwide crossed $1.2 trillion as of February 2025, nearly doubling 2023’s $695 billion.
It’s little surprise that active ETFs continue to carve out market share, given the number of offerings coming to market. Last year, over half (51%) of all ETFs launched were active strategies. This year favors active even more; active ETF strategies made up 60% of all ETF launches in the opening months of 2025.
Investor demand appears undiminished as well, with 22% of all net flows going to active ETFs in 2024. In the early months of this year, active ETF strategies pulled in 30% of flows, according to Track Insight. Part of this demand likely funnels directly from mutual funds. “In 2024, U.S. mutual funds saw net outflows of $388 billion according to Morningstar, while active ETFs attracted record inflows,” the authors wrote.
Tailwinds for Ongoing Investor Adoption of Active ETFs
A number of factors likely contributed to rising demand, including possible regulatory changes, mutual fund to ETF conversions, and innovation within both active ETFs and model portfolios. On the near horizon is the potential approval of an ETF share class. Such an approval would mean that relevant mutual funds and ETFs would share classes under the same investment vehicle. It could open up a whole new window of opportunity for active ETFs. However, much remains unknown, particularly regarding tax implications, should the SEC approve the ETF share class.
The increasing preference for the ETF wrapper likely prompted many asset managers to reconsider their mutual fund strategies. The survey noted that 57 mutual funds converted to ETFs in the last year, representing $8.4 billion in AUM, per Morningstar Direct data. It’s a trend that continues into this year as firms look for ways to rejuvenate existing offerings.
Finally, ongoing innovation both within ETFs as well as in model portfolios should drive ongoing active ETF interest. With ETFs that offered single-stock inverse, leveraged, or income-oriented approaches coming to market in the last year, advisors and investors find their toolkit expanding. Options-based ETFs also continue to grow, with new iterations and innovations increasingly finding their way into portfolios. At the same time, evolutions in model portfolios now see more advisors using a mix of active and passive ETFs. It creates yet another tailwind for ongoing active ETF adoption looking ahead.
“The active ETF space is nearing its next growth wave. Share class reform, more fund conversions, and new entrants are reshaping the market,” explained the authors. “Emerging themes—like private credit, and enhanced income strategies—are pushing boundaries on what ETFs can deliver.”
T. Rowe Price, an active manager with almost 1,000 investment professionals globally, offers a suite of actively managed ETFs for investors. These include the T. Rowe Capital Appreciation Equity ETF (TCAF ), the T. Rowe Price U.S. Equity Research ETF (TSPA ), and the T. Rowe Price Ultra Short-Term Bond ETF (TBUX ).
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