Active ETFs gathered $245.95 billion in the first quarter, a 70% increase from the same period in 2025, according to a recent ETFGI report.
Key Takeaways:
- Active ETFs gathered a record $245.95 billion in the first quarter, up 70% from the same period in 2025.
- Nontraditional equity funds attracted $8.04 billion last month.
- T. Rowe Price eliminated the cost barrier to active management with a zero net expense ratio.
The surge continued through March despite a 4.98% decline in the S&P 500, with active strategies pulling in $78.37 billion that month, ETFGI reported. The fee structure of the T. Rowe Price U.S. Equity Research ETF (TACU) highlights how issuers are removing cost barriers, with introductory fee waivers resulting in a zero net expense ratio to compete directly with passive alternatives.
Active strategies now capture 42% of all flows into ETFs, up from 26% in 2024, according to Bloomberg data cited in a recent industry report. The shift reflects investors’ willingness to pay for security selection when the price gap narrows or disappears.
Nontraditional equity funds gathered $8.04 billion last month, bringing year-to-date inflows to $69.06 billion, Morningstar reported. The category, where active strategies often reside, has attracted $167.8 billion over the past three years.
Active equity funds overall saw net outflows of $31.16 billion as investors pulled money from traditional mutual fund structures, the Morningstar data indicated. However, active ETF products within equity categories continue drawing assets as the wrapper shifts rather than the strategy itself.
Active Strategies Gain Ground in Equity Categories
Active U.S. equity ETFs pulled in approximately $100 billion in the first quarter, with derivative income strategies accounting for 13% of those flows, according to Morningstar data cited in the industry report. Large-blend active strategies captured 12% of inflows, while foreign large-blend products took 11%.
Passive large-blend funds added $210 billion in the first quarter to reach $7.7 trillion in assets, Morningstar showed. The concentration in a handful of mega-cap stocks has prompted some investors to seek active approaches that can avoid benchmark weights.
Fixed income funds gathered $28.6 billion, with ultrashort bond strategies pulling in a record $24.4 billion as oil prices spiked above $100 per barrel, according to Morningstar. The rotation into cash-like instruments reflected inflation concerns tied to geopolitical events.
For equity investors remaining in stocks, active strategies offer an alternative to passive concentration risk. T. Rowe Price uses a bottom-up approach for stock selection, emphasizing individual company analysis over macroeconomic trends, the fund’s factsheet stated. The strategy targets indicators of near-term appreciation potential alongside longer-term quality metrics.
The zero-fee structure helps remove the initial fee barrier perceptions that active manager often face from heavy index users. Enhanced index strategies like TACU provide a low cost entry into active management, but with relatively low tracking error from the index.. TACU carries a 0.14% gross expense ratio, with the firm absorbing all costs through a contractual waiver that extends through January 2027.
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