The global exchange-traded fund market’s expansion is accelerating across all major regions, according to State Street’s 2025 Global ETF Outlook report.
A record $1.9 trillion poured into ETFs last year, pushing total assets to $14.7 trillion, with every major ETF market seeing inflows between 20% and 30%.
Asset managers have responded to mounting customer demands by launching new ETFs, the report stated, as active strategies capture growing interest.
“Investors have voted with their feet,” the report states, noting that this has led multiple new major managers to enter the ETF space and broker/dealer platforms to increase the number of active ETFs they are willing to use.
State Street’s analysis reveals that the convergence of product innovation, regulatory developments, and broader investor adoption is transforming the investment landscape, as ETFs continue to gain market share from traditional investment vehicles across both institutional and retail segments worldwide.
Frank Koudelka, global head of ETF Solutions at State Street, and his team predict active ETFs will continue gaining market share in 2025. Their analysis shows that active strategies are where new entrants can best differentiate themselves, especially in fixed income, where active flows are expected to increase while passive fixed-income flows could stall.
The digital asset boom represented a major 2024 development. After the Securities and Exchange Commission approved the first spot bitcoin ETFs, this new category attracted $64 billion in flows, creating an asset class that ended the year with $118 billion in assets. State Street excluded Grayscale’s converted assets in the analysis.
“A new asset class was born,” the report noted. “To give this context, U.S. actively managed ETFs did not eclipse $100 billion until 11 years after the first launch.”
State Street expects more spot multi-coin ETFs beyond Bitcoin and Ethereum in 2025, along with the development of in-kind trading of these products.
Derivative-based products are also flourishing. Buffer ETFs, which use options contracts to offer predefined outcome ranges, also saw growth in 2024, with innovations like 100% protection products emerging. These could increasingly replace portions of traditional passive fixed income allocations, according to the report.
Eduardo Repetto, chief investment officer at Avantis Investors, described in the report that ETF growth resembles “the decline in pay phone/landline usage as cellular technology was adopted,” noting that ETFs provide stronger protections from the actions of other shareholders than mutual funds do.
