US ETF investments to cross $2 trillion in 2026: Goldman Sachs

According to Goldman Sachs, investments in US-listed ETFs are projected to exceed $2 trillion in 2026. The market is on track for a record year, driven by a structural shift towards active management, product innovation, and thematic investing.

Investments in US-listed exchange-traded funds (ETFs) are expected to cross $2 trillion in 2026, marking a 40 per cent increase over inflows recorded in 2025, according to Goldman Sachs Global Banking & Markets.

More than $1 trillion has already flowed into US-listed ETFs during the first half of 2026, putting the market on course for a record annual inflow, Goldman Sachs said in its analysis.

Structural Shift Towards Active Management

The investment bank said the ETF market is undergoing a structural shift as investors increasingly use funds not only to track market indexes but also for active management, portfolio construction, thematic exposure and risk management.

"We're now seeing some of the most advanced active management strategies in the markets expressed within the ETF wrapper," Tom Campbell, head of Americas ETF distribution at Goldman Sachs Global Banking & Markets, said.

These strategies include leveraged funds, fixed-income products and structured derivatives, Campbell noted.

Rise of Active ETFs

Active ETFs are emerging as a major driver of the market's growth. More than 35 per cent of ETF inflows in 2026 are going into actively managed funds, even though such funds account for roughly 13 per cent of the $16.1 trillion in assets under management in US-listed ETFs.

"Active is really driving a lot of growth in the ETF market and it's definitely noticeable on the trading desk," Jackson Isaacs, head of Americas equity ETF trading at Goldman Sachs Global Banking & Markets, said.

Innovation and Thematic Demand Fuel Growth

Goldman Sachs said the pace of product innovation is also contributing to the surge. More than 1,100 new ETFs entered the market in 2025, and the firm expects that record to be surpassed in 2026, with the number of US-listed ETFs projected to exceed 6,000.

The bank also highlighted rising investor demand for customised portfolios and thematic investment strategies. Assets in third-party model portfolios have risen 46 per cent over the past 12 months to $950 billion, according to Goldman Sachs.

Thematic ETFs are also gaining traction, with investors using the products to access specific markets and sectors. Semiconductor ETFs, for instance, recorded more than $19 billion in aggregate inflows in June, their largest monthly inflow on record, while software ETFs saw roughly $1.9 billion in outflows.

Record Trading Volumes and Widening Adoption

Goldman Sachs said ETF trading volumes are running 50 per cent above 2025 levels, which was itself a record year. The ETF industry is averaging around $320 billion in notional trading volume per day.

"The ETF industry is averaging roughly $320 billion in notional trading volume per day," Campbell said, adding that ETFs can account for as much as 40 per cent of trading activity during periods of market stress.

The report said the growing use of ETFs by institutional investors, including pension funds, alongside retail and wealth-management adoption, is broadening the role of the products across investment portfolios.

Goldman Sachs noted that ETFs are increasingly being used for portfolio rebalancing, hedging, liquidity management and gaining exposure to specific investment themes.

The investment bank's analysis is based on data gathered by Goldman Sachs Global Banking & Markets and comments from Campbell and Isaacs. The firm said the article is for educational purposes and does not constitute investment, financial, legal, accounting or tax advice. (ANI)

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