Capital is accelerating into the market, with the global ETF scale surpassing $15 trillion, and active and leveraged ETFs becoming the new favorites

Global ETF assets soar, asset management companies apply to add ETF products to existing mutual funds. On December 12th local time, the Financial Times reported that global ETF assets have surged to $15 trillion. The U.S. is at the center of this influx, attracting over $1 trillion as traders bet on a strong rebound in Wall Street stocks. According to research firm ETFGI, this growth is primarily due to investors massively shifting from mutual funds to ETFs. This year, investors have poured $1.7 trillion into ETFs, increasing the total assets of the industry by 30% compared to 2023, while mutual funds have lost about $2 trillion in assets over the past three years. Currently, BlackRock, Vanguard, and State Street are the three major ETF providers, managing large ETFs that track the S&P 500 index. In addition to index-tracking ETFs, leveraged ETFs have also seen a significant influx of funds, as they allow traders to double down on bets on Tesla stocks, chip stocks, and Bitcoin. Active ETFs and those focused on government and corporate debt are also quite popular, with analysts suggesting that investors are not only "passively" tracking indices but also using ETFs to expand into broader strategies. Daniil Shapiro, Director of Product Development Practice at consulting firm Cerulli Associates, stated that ETFs are characterized by low costs, strong innovation, and excellent fit in various portfolios: "The ETF structure is becoming the 'universal structure' of the investment management industry." However, the size of U.S. mutual funds still far exceeds that of ETFs, with total managed assets amounting to $21.6 trillion—after all, mutual funds are widely used in retirement accounts. Shelly Antoniewicz, Chief Economist at the Investment Company Institute, expects asset management companies to shift towards a new balance: "They will ultimately give the choice to investors, allowing them to decide which (mutual fund or ETF) is more appealing to them and which better meets their needs." Currently, over 30 asset management companies have submitted applications to regulators to add ETFs to existing mutual funds, and the market is optimistic about this application due to Trump's previous promise to reduce regulation. Shapiro stated: "There is great optimism in the industry regarding the (regulatory) easing of these products in the coming year."