December’s US$235B surge caps a historic year for ETFs, reshaping portfolio construction into 2026
US-listed ETFs closed 2025 with a flourish that few were expecting with December inflows alone hitting an unprecedented US$235 billion which pushed full-year additions to a record $1.515 trillion.
The year-end surge cemented 2025 as a defining moment for ETFs, underscoring how advisors and investors are increasingly using the vehicle across asset classes, strategies and geographies and the momentum was broad-based according to data from State Street Investment Management.
Equity ETFs led the charge late in the year, pulling in $390 billion over the final three months as markets rallied and risk appetite strengthened. Fixed-income ETFs were not left behind, gathering a record $448 billion for the year, while commodities and alternatives also posted solid gains as investors sought inflation-sensitive and diversifying exposures.
December’s blockbuster finish capped a fourth quarter in which ETFs absorbed $564 billion — double the typical Q4 pace. The scale of those flows highlights not only investor confidence but also how deeply ETFs are embedded in portfolio construction.
Total US-listed ETF assets climbed to roughly $13.4 trillion by year-end, another industry milestone.
Equities: growth, income and a look abroad
Equity ETFs took in $941 billion in 2025, easily surpassing the prior year. Within that total, US growth strategies dominated, with $134 billion of inflows, beating US value by the widest margin on record. The gap reflects investors’ continued preference for growth-oriented exposures tied to AI and other secular themes, even as valuations stretched.
Equity income ETFs attracted a record $97 billion, fueled by demand for dividend strategies and derivative income products. With the S&P 500’s yield/390918">dividend yield near historic lows, advisors increasingly leaned on ETFs to generate cash flow without abandoning equity exposure.
International and emerging-market equity ETFs collectively brought in $244 billion during the year, the highest on record. While US equities still accounted for the majority of equity flows, the shift suggests investors are gradually addressing long-standing home bias and seeking diversification after non-US markets outperformed the US by the largest margin since 2009.
Fixed income regains relevance
For balanced portfolios, 2025 marked a turning point. Bonds not only posted positive returns but also beat cash for the first time since 2020, reigniting advisor interest in fixed income as a return contributor rather than just a ballast.
Bond ETFs drew $448 billion for the year, with active strategies playing an outsized role. Active bond ETFs gathered $178 billion — about 40% of all fixed-income ETF inflows — reflecting investors’ belief that security selection and sector rotation matter more in a world of tighter spreads and shifting rate expectations.
Short- and intermediate-term government bond ETFs captured the bulk of government bond flows, while long-duration funds continued to see limited interest. Credit exposure, however, was in demand. High-yield, investment-grade corporate bonds, bank loans and CLO ETFs all attracted strong inflows, signaling a willingness to take measured growth risk within fixed income.
Inflation-linked bond ETFs also staged a comeback, posting inflows in every month of 2025 and finishing the year with $12 billion in net additions — their best showing since 2021.
Commodities, real assets, thematics
Commodities contributed to the diversification theme. Gold ETFs pulled in a record $48 billion for the year, while broad commodity ETFs ended 2025 with $3 billion of inflows. December alone saw gold and silver ETFs post some of their strongest months ever, as investors continued to hedge inflation and geopolitical uncertainty.
On the strategy front, both active and low-cost ETFs thrived, but in different ways. More than half of equity ETF flows went into low-cost products, reinforcing their role as core building blocks. In contrast, active ETFs captured a growing share of fixed-income flows, where advisors appear more willing to pay for flexibility and expertise.
Thematic ETFs also staged a rebound after several difficult years, attracting $23 billion in 2025. Robotics, artificial intelligence and smart cities dominated those flows, though the concentration suggests advisors remain selective rather than broadly bullish on thematics.
As markets head into 2026, risks remain — from geopolitics to elevated valuations — but the breadth of ETF flows suggests investors and their advisors are positioning for multiple outcomes rather than a single narrative.
