Episode summary
ETFs 2025 Wrapped with Morningstar’s Ben Johnson
ETF Prime
· · 1 hr 11 min · Hosts: Nate Geraci, Simeon Hyman · Guests: Ben Johnson
Summary
ETF assets reached $13.2 trillion, or 37% of combined mutual fund and ETF assets, and Ben Johnson argued that 2025 mostly extended long-running secular trends rather than creating a brand-new ETF story. He said the industry’s record inflows, launch pace, and trading volume reflect broad adoption by institutions, advisers, and individuals who prefer the ETF wrapper for convenience, tax efficiency, and portfolio construction. He also argued that market strength can create inertia, keeping assets parked in existing funds, while drawdowns and reduced tax friction can accelerate moves into ETFs.
Johnson said the biggest growth engines in 2025 were active ETFs, fixed income ETFs, and derivative-income or defined-outcome ETFs. Active ETFs now outnumber index ETFs by count and accounted for a large share of new launches and roughly a third of flows. Fixed income ETFs posted a record year, and he said the category has transformed bond market access. Options-based and income-oriented products also continued to gather assets, though he cautioned that the category includes both thoughtful strategies and “dumb funds” that can be too narrow, expensive, or tax-inefficient.
He also called ETF as a share class the year’s most important story, saying the structure could reshape how investors access mutual fund strategies. Beyond that, he flagged the fight for ETF supremacy between BlackRock and Vanguard, the continuing mainstreaming of crypto ETFs, and the still-early state of private assets in ETF form.
Key takeaways
- Johnson said ETF as a share class is the most important 2025 story because it could change how investors access the same strategy across wrappers.
- Active ETFs are now a major flow engine, with Johnson saying they accounted for roughly a third of 2025 ETF inflows.
- Fixed income ETFs posted a record year, with Johnson citing about $399 billion in year-to-date flows by last Friday.
- Johnson warned that some options-based ETFs are thoughtful, but others are “dumb funds” that can be tax-inefficient and too narrow.
- Johnson said Vanguard was his ETF issuer of the year because of $421 billion in year-to-date flows and 15 new launches.
Notable quotes
“ETF assets now at 13.2 trillion. That represents 37% of combined mutual fund and ETF assets”
“I think it's going to be in hindsight the ETF story of the year, which is ETF as a share class”
“Active ETFs this year of those nearly 1100 new launches accounted for over 85% of net new launches they've accounted for roughly a third of overall flows into ETFs this year”
“as of last Friday, I counted 399 billion in year-to-ate flows into fixed income ETFs”
“We know how it ends which is for the unwitting generally not with good outcomes”
How the episode opens
So, as we sit here today, ETF assets now at $13.2 trillion. That represents 37% of combined mutual funded ETF assets. And that figure has been going up and up and up.
All right, joining me will be Ben Johnson, head of client solutions at Morning Star, who of course is a leading provider of independent investment research, ratings, financial data, portfolio tools. Uh they really do it all to help support investors and financial professionals. And Ben himself, this is someone who I always say is one of the best in the business covering ETFs.
He's been doing this a long time. He's absolutely in the pantheon of ETF nerds. And I'll tell you right now, this is one of my favorite episodes I do every year because if you don't know, Ben has actually been joining me for eight years running now to recap the year in ETFs and look ahead to the upcoming year.
And that's exactly what we'll be doing this week. Uh, you're going to get to hear Ben's top ETF stories from 2025, his favorite new ETF this year. You'll find out his ETF issuer of the year.
We'll certainly get into ETF flows. We have a bunch of topics for you. And again, we'll also look ahead to 2026 as well.
And the good news for you is after having Ben do this episode for the past seven years, I have finally learned my lesson and decided to give him the full hour or so because we always come up short on time. And so you're going to get the full hour of Ben and I. And hopefully you'll also get a full tour through the world of ETFs in 2025.
As always, questions or comments, you can find me on xnate jerce or you can go to etfprime.com.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- etf wrap 2025
- etf awards
- etf issuer trends
- etf industry outlook 2026
- investment research
Companies and tickers mentioned
- MORN
- Morningstar
Watch the episode
Watch “ETFs 2025 Wrapped with Morningstar’s Ben Johnson” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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ETF Prime, this episode and its artwork belong to Nate Geraci. Octagon is not affiliated with the show; this page is an independent summary.
