After a record breaking year of inflows into the ETF space in 2025, there is strong momentum at the start of 2026, with investors adding more than $100 billion to exchange traded funds in just the first two weeks of the new year. And while passive strategies still dominate among ETFs, actively managed funds are increasingly fueling growth in the ETF space.

According to JPMorgan, U.S. ETF assets now total $13.4 trillion, a growth of 33% year over year. But the biggest growth acceleration was in active management. More than 30% of all flows went to active strategies in 2025, nearing a total of $400 billion by the end of 2025, data from TCW shows. That figure stands well above the $300 billion active ETFs raked in by the end of 2024.

Active ETF assets grew 63% year over year, surpassing $1 trillion in 2025, and currently stands at nearly $1.5 trillion, compared to just over $900 million in 2024. 

“Were going to continue to see the market trading around news, trading around headlines, waiting for new data to come out,” said Scott Dennis, Head of ETFs at TCW during a recent episode of The ETF Show.

“Active ETFs are a great spot to be in when markets are quite volatile as they are.”

Volatility-driven demand for active strategies appeared in all asset classes in 2025.

According to TCW, active fixed income ETFs saw $164 billion in inflows last year as Fed moves and rate cutting cycle drove investors to desire flexibility. Active equity ETFs snapped up $264 billion in inflows as high market concentration and volatility increased investor appetites. Actively managed funds represented the majority of new launches in the space, and now represent nearly 54% of all ETFs which currently total about 4,600.

“Active flows actually doubled up in terms of what passive flows were in 2025,” Dennis explained. “Investors are looking for an active ETF wrapper that allows them to trade around and invest around news and volatile markets.” 

“In the active space you can rotate different sectors and in fixed income, you can go short duration, long duration,” he continued. “The portfolios can change. You’re not tied to an index like you are in the passive space.”

Flexibility is becoming more and more necessary as geopolitical risks continue to increase, and inflation continues to concern investors. Though markets have remained resilient, investors still have to contend with policy fog regarding tariffs, uneven economic data and growth, and volatility. 

“There’s a lot of geopolitical risk out there. Inflation seems to be under control but is certainly a prevalent aspect in investor decisions,” Dennis said. “Investors are wanting to move toward generating alpha in this current environment.”

In 2026, while passive strategies remain foundational, it’s clear that active ETFs are where investors are increasingly turning for adaptability, risk management, and alpha generation.