Active exchange-traded funds have become the dominant force in new fund creation, with 953 active ETF strategies launched in 2025—84% of all new ETFs that year, according to Cerulli Associates. That figure is more than triple the 308 active strategies introduced in 2021 and exceeds the 797 total ETFs launched that year. The surge reflects a structural shift in how advisors, particularly registered investment advisors, are building portfolios.
Holly Framsted, global head of product at Capital Group, said RIAs were among the earliest adopters of ETFs and are now increasingly turning to active versions. “It's an area of the market where we see a tremendous amount of growth,” she said during a media roundtable in Manhattan. Capital Group, which launched its first active ETF in February 2022, now manages just over $150 billion in ETF-based assets, and Framsted called the firm the fastest-growing active ETF issuer in the marketplace.
The adoption is closely tied to the rise of model portfolios. Framsted noted that the fastest-growing financial advisors are increasingly outsourcing investment management to models as a way to scale their practices. “You can effectively free up your time managing the investments and reallocate that time toward client service and new client acquisition,” she said. That dynamic is especially pronounced in the RIA ecosystem, where tradability and tax efficiency make ETFs attractive building blocks.
Active ETFs also serve as a client acquisition tool, particularly for younger investors. Research Capital Group released last year found that active ETFs can help advisors attract Gen X, millennial, and Gen Z clients. The tax efficiency of the ETF wrapper, which can reduce capital gains distributions compared with mutual funds, is another selling point for advisors looking to improve practice management.
The broader ETF market is setting records. In July, State Street reported that rolling 12-month flows for U.S.-listed ETFs reached $2 trillion, a record for any 12-month period, and suggested a $2.3 trillion year is possible. Active ETFs captured 39% of all year-to-date flows, according to State Street data. That momentum is reshaping the competitive landscape, as active ETFs now represent 12% of the $14.9 trillion ETF market, a share that continues to climb as advisors shift from mutual funds.
For RIAs, the trend is not just about performance. The operational benefits—such as intraday trading and lower tax drag—are prompting many to rethink their core-satellite structures. As Framsted put it, the RIA ecosystem is one where high-growth advisors are “increasingly using models, which are increasingly adopting ETFs because of the tradability and the tax efficiency.”
While active funds have historically struggled to beat passive benchmarks over long periods—75% of active funds lagged their passive peers over the past decade—the ETF wrapper's structural advantages are driving adoption regardless. Advisors are using active ETFs for specific sleeves, such as fixed income or international equity, where active management can add value.
The growth is also drawing attention from private equity and consolidators. Carlyle's $600 million investment in Prime Capital, which values that RIA at $1.8 billion, underscores the capital flowing into the space. As more advisors embrace ETFs and models, the firms that provide the underlying strategies—like Capital Group—are well positioned to benefit.
