ETF Market Surges Past $11T Amid Outflows from Mutual Funds
The exchange-traded fund (ETF) market has officially surpassed $11 trillion in total assets, propelled by both robust equity performance and sustained organic inflows. According to the latest Cerulli Edge—U.S. Product Development Edition, ETFs drew $511 billion in net inflows during the first half of 2025, underscoring their dominance as the preferred investment vehicle for advisors and investors alike.
Advisor allocation trends remain one of the most powerful drivers of ETF growth. Cerulli’s research found that 52% of asset managers consider advisors increasing existing ETF allocations a major driver of asset growth, with another 48% viewing it as a contributing factor. Over the past decade, ETF adoption among advisors has more than doubled — from 11.2% in 2015 to 21.6% in 2024 — and is expected to rise to 25.5% by 2026, surpassing mutual fund allocations for the first time.
“Asset managers have come to value the lower structural cost of ETFs, the tax efficiency stemming from the creation-redemption mechanism, and the ability to trade them intra-day on an exchange,” said Kevin Lyons, Senior Analyst at Cerulli Associates. “These attributes have made ETFs the natural evolution of the fund vehicle, especially as advisors seek scalable and cost-efficient solutions for clients.”
The shift comes as ETFs continue to displace mutual funds and individual securities, reflecting both cost pressures and the democratization of portfolio construction tools. Advisors are increasingly turning to model portfolios, direct indexing, and ETF-based SMAs, viewing ETFs as the most flexible and tax-aware building blocks for client portfolios.
Cerulli’s report shows that the wirehouse and independent RIA channels account for 54.6% of total retail ETF assets, a testament to both the scale of traditional advisory platforms and the innovation of independent firms.
“The wirehouse use is boosted by the sheer scale of the channel, but the independent RIA community has been pioneering ETF use thanks to demand for low-cost beta building blocks,” Lyons added. “RIAs also do not face the same product-access restrictions as broker/dealers, which allows them to embrace new ETFs entering the market more rapidly.”
Looking ahead, Cerulli expects ETF adoption to broaden across all advisory channels, including banks and hybrid RIAs, as advisors become more comfortable using ETFs across asset classes and strategies.
