Record $576B Inflows to Active ETFs Amid Market Turmoil

Active exchange-traded funds (ETFs) reached a new milestone, attracting a record $576.2 billion in inflows through September. This surge came despite a challenging month for global markets, with rising rates pushing stocks and bonds lower.

According to State Street Investment Management’s report, active ETFs pulled in $60.1 billion in September alone. This strong performance was driven by investors seeking alternatives to traditional investments.

Foreign stock strategies led the charge, with non-U.S. stocks capturing 36% of equity ETF flows in September, despite representing only 17% of equity assets. Ultrashort bond funds and options-based income strategies also gained popularity as investors sought to handle rising rates.

The report highlights a significant shift in investor preferences. Active strategies now account for nearly 40% of U.S.-listed ETF flows this year, while holding just 13% of industry assets. This growth is not limited to a single market theme, with active funds spanning 123 categories tracked by Morningstar.

Matthew Bartolini, State Street’s global head of research strategists, noted that active funds have become a primary growth engine in the industry. This is evident in the diverse range of strategies attracting inflows, from foreign large-blend stocks to derivative-income and defined-outcome funds.

As investors seek income and protection in a low-yield environment, active ETFs are increasingly seen as a viable solution. With stock dividend yields at record lows, derivative-income strategies took in $6.1 billion in September, bringing the year’s total to $51.6 billion.

The trend towards active ETFs is part of a broader shift in the investment environment. Over the past decade, mutual funds have lost $3 trillion to outflows, while ETFs have drawn in $7.8 trillion. This shift is likely to continue as investors seek more flexible and diverse investment options.

U.S.-listed ETFs also had a strong showing, taking in $151 billion in September and lifting 2026 inflows to $1.54 trillion. This surpasses the full-year record set in 2025, with three months still remaining.

On the bond side, active ETFs focused on fixed income collected $21.8 billion in September, bringing the year’s total to $176.3 billion. Ultrashort bond funds led this category, reflecting investors’ preference for limiting duration risk.

Alternative active strategies also gained traction, drawing $4.5 billion in September and a record $56 billion this year. This growth comes as traditional diversification tools struggle to provide effective risk management.