The new year is just around the corner, but investors may not want to leave this year’s lessons behind too soon. Many research analysts have worked long hours to craft retrospectives on the year in ETFs, with hidden gems of knowledge to be unearthed by the observant reader. Looking back can help market watchers look ahead and plan for an uncertain 2026. As such, here are three key takeaways to consider from this year.
Lines Blurring Between Mutual Funds & ETFs
It’s easy to get caught up in the frenetic, headline-driven narratives about the market. From A.I. investing and profitability to the Fed, macro stories tend to color how we think of given years in review. Those factors matter, but they shouldn’t overshadow the deeper stories about “how” investors and advisors actually invest.
One such story that should not be ignored: the blurring of lines between ETFs and mutual funds via share class changes. As VettaFi Head of Research Todd Rosenbluth previously discussed for this outlet, ETF and mutual fund share classes will offer advisors and investors an even greater degree of personal choice in crafting bespoke portfolios. Having ETF share classes of certain funds can help increase ETF access for investors that have traditionally relied on mutual funds primarily.
“It’s a game-changer for investor choice,” Rosenbluth wrote. “Clients will soon access the same strategy in the wrapper that fits their account type, tax profile, or platform — without sacrificing performance or product consistency. Investors will also be able to convert — likely tax free — existing mutual fund assets into an ETF.”
…But Don’t Ignore ETF Growth
That said, new ETF-specific strategies are launching all the time, to the tune of 1,036 so far this year, according to Factset data. U.S. ETF AUM reached a record $13.2 trillion last month with $147.7 billion in net inflows, that data said, bringing the year’s haul of flows to $1.26 trillion in total.
By now, many are familiar with the advantage of the ETF wrapper, with asset managers pushing the limits of the wrapper to meet investor needs. Increasingly, advisors and investors can look to ETFs to not only serve thematic roles, but also core positions. Fee compression has played a part therein, as well as the increased adoption of active ETFs.
Investors across the retail and institutional spectrum are contributing to that growth. According to recent research from Schwab, most investors began using ETFs within just the last five years. Specifically, 66% of respondents to their survey only began investing in ETFs in 2020 or later. In addition, some 62% of respondents said they can envision using ETFs for their entire portfolio, up from 50% in 2020.
…And Greater Fund Diversity
What does this all mean for 2026? ETFs, already a flexible tool to craft portfolios, come in a greater variety of flavors than ever before. 2025 has seen more than 1,000 ETFs launch so far, with more than 100 introduced in November, per Factset data.
2025 has seen hundreds of funds, implementing strategies that are anything but plain vanilla, join the ETF ranks — including plenty of leveraged funds and the incredibly popular income and buffer ETFs that hold a great deal of appeal for older investors near retirement. Some asset managers are even pushing more deeply into private markets via ETFs, aiming to offer exposure to historically inaccessible investments in the transparent ETF vehicle. Looking ahead, that particular strain of products and their potential to provide solutions to investors makes ETFs a critical consideration in the new year.
Originally published on Advisor Perspectives
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