US ETF market hits $16 trillion as risky new products flood the field
Passive still dominates, but active is gaining fast
Passively managed, or index-based, ETFs remain by far the largest segment of the US market, collecting 87.5% of total ETF assets. Three S&P 500 index funds – Vanguard’s VOO, iShares’ IVV, and State Street’s SPY – alone account for approximately 17% of all money in US ETFs, according to the Morningstar data.
But the gravitational pull of active management is reshaping how the industry grows. Actively managed ETFs accounted for 12.5% of all ETF assets at the end of June 2026, with the surge in active launches catalyzed by the SEC’s adoption of Rule 6c-11, known as the ETF Rule, in 2019, which made it far easier for active fund managers to enter the ETF wrapper without compromising their investment process.
Active ETF assets have crossed $1.47 trillion, growing at a 59% compound annual rate over the past three years, according to ETF.com. Despite that momentum, performance data remain sobering. The most recent SPIVA scorecard, published in early 2026, found that 79% of actively managed large-cap US equity funds underperformed the S&P 500 in 2025. Over a ten-year horizon, only 24% of active ETFs have beaten their benchmarks.
That underperformance record has not slowed asset gathering, in part because not all active ETFs are trying to beat the market. The largest providers in the active space – Dimensional Fund Advisors, J.P. Morgan Asset Management, and Capital Group – largely offer systematic or rules-based strategies that sit somewhere between pure indexing and discretionary stock picking.
The mutual fund migration accelerates
Alongside the active ETF boom, a structural shift in how fund companies distribute their products is reshaping the competitive landscape and creating new options for advisors managing clients across taxable and retirement accounts. Since Guinness Atkinson converted two funds into ETFs in March 2021, another 208 mutual funds opted to convert to an ETF format through June 30, 2026.
