Asset managers that have not deliberately evaluated where exchange-traded funds (ETFs) fit within their product strategies are increasingly making a strategic choice by default. Investor preferences and distribution channels are shifting toward the structure, with implications for how managers attract assets and compete.
U.S. ETF assets surpassed $13.5 trillion in 2025, and as of October 2026 now sit at $16.55 trillion across over 5,800 ETFs. Approximately 60 mutual fund-to-ETF conversions were completed in 2025, the highest annual total on record, compared to 54 completed or planned conversions if 2026. But the growth and scale of the market tells only part of the story. Managers now have more ways to enter the ETF market and incorporate the structure into their broader product strategies.
ETFs Have Evolved Beyond Passive Investing
ETFs initially gained prominence through passive and index-based strategies, but the market has expanded. Active managers are increasingly using the structure to offer established investment capabilities to a broader investor base.
The options available to managers have broadened as well. New active ETF launches can provide another vehicle for existing or new investment strategies. Currently there are over 3,400 active ETFs in the US, of which over 850 launched in 2026.
Other ETF strategy trends such as Leveraged and Inverse ETFs, defined-outcome and buffer ETFs and derivative-income ETFs have become popular among retail investors.
The question is no longer simply whether to launch an ETF, but where the structure could strengthen a manager’s broader product lineup.
Have ETFs Become the Main Driver of Growth for Asset Managers?
For many managers, the motivation to evaluate ETFs centers on asset growth and retention.
ETFs offer potential access to new investor segments and distribution channels, allowing managers to bring existing capabilities to audiences they may not reach as effectively through other structures.
That makes ETF strategy part of a broader product decision: Which strategies are well suited to the structure, where could an ETF complement existing offerings and what role could it play in the firm’s long-term growth plans?
Is Avoiding ETFs a critical mistake?
Not every investment strategy belongs in an ETF, and launching one simply because the market is growing is not a strategy.
But neither is maintaining the status quo without evaluating the alternatives. Managers should consider whether ETFs could strengthen their existing lineup, support asset retention or create new avenues for growth.
The goal is not necessarily to launch an ETF, but to make an informed decision about where the structure fits.
ETFs Can Be a Path Into the U.S.
For international asset managers seeking to expand into the U.S., ETFs can serve a different strategic purpose. A manager may have established investment expertise and successful strategies in other markets but still needs to determine the right vehicle for reaching U.S. investors and distribution channels.
An ETF can form part of that market-entry strategy, but choosing a product structure is only one consideration. International managers also need to assess the operating infrastructure required to support a U.S. offering, including fund servicing, administration, regulatory requirements and distribution.
Looking Beyond the Wrapper
The ETF opportunity is increasingly about more than selecting a product structure. It is about determining where ETFs can support a firm’s investment capabilities, growth objectives and longer-term strategy.
For U.S. managers, ETFs may support asset growth and retention. For international managers, they may also provide a route into the U.S. market.
Considering where ETFs fit within your product strategy? Download Entering the ETF Market: A Strategic Roadmap for U.S. and International Asset Managers to explore the available paths to market and the strategic and operational considerations involved in building an ETF offering.
