State Street Predicts Top ETF Trends for 2025-2026

State Street Global Advisors predicts 9 ETF trends for 2025-2026 in its ETF Impact Report, highlighting key trends and predictions for the growing asset group. The report includes predictions on ESG investing, the rise of smart beta, and the growing importance of digital assets and alternative data.

State Street Global Advisors (SSgA) has released its annual ETF Impact Report, offering a comprehensive outlook on the evolving landscape of Exchange-Traded Funds (ETFs) for the years 2025 and 2026. The report highlights nine significant trends that are shaping the future of ETFs, including the continued growth of ESG investing, the rise of smart beta strategies, and the increasing importance of digital assets and alternative data.

One of the most prominent trends identified by SSgA is the projected growth of the global ETF market. The report predicts that ETF flows will reach $2 trillion by the end of 2025, driven by innovation in active management and new asset categories. This growth is particularly notable in the fixed-income sector, where active ETFs are gaining traction as investors seek real-time adjustments to changing market conditions [2].

Another key trend highlighted in the report is the growing demand for ESG investing. Despite a cooling U.S. appetite for ESG funds, AlTi Global reported a 14% revenue surge and a 38% jump in adjusted EBITDA for Q1, underscoring the resilience of ESG-focused investments [1]. The report also notes that younger investors are increasingly embracing ESG and sustainable investing, with 69% of millennials investing in non-traditional assets compared to 46% of baby boomers [2].

The rise of smart beta strategies is another trend highlighted in the report. Smart beta ETFs use alternative weighting schemes and other techniques to provide more targeted exposure to specific factors or sectors. The report predicts that smart beta ETFs will continue to grow in popularity as investors seek more dynamic and customized investment solutions.

The report also emphasizes the growing importance of digital assets and alternative data. The global crypto ETF market has seen significant growth, with assets surging 255% year over year to reach $127.7 billion in 2024 [2]. Additionally, AI-themed ETFs are driving record flows for thematic investments, with $2.4 billion collected in just the first two months of 2025 [2]. The report notes that these evolving ETF categories play a valuable role in long-term planning and retirement strategies, signaling a fundamental shift in how professionals approach portfolio construction for clients [2].

In summary, the State Street Global Advisors ETF Impact Report provides a comprehensive overview of the key trends and predictions shaping the future of ETFs. From the growth of the global ETF market to the increasing importance of ESG investing, smart beta strategies, and digital assets, the report offers valuable insights for investors and financial professionals alike.

References:
[1] https://www.investmentnews.com/esg/alti-global-posts-q1-growth-maintains-esg-investing-approach/260498
[2] https://finance.yahoo.com/news/active-etfs-surge-2t-etf-183000198.html