Low-cost funds took half of record $1T ETF inflows

ETF inflows crossed $1 trillion in the first half of 2026, InvestmentNews reports. On that pace, the industry will collect $2 trillion for the full year. Half of every dollar went into low-cost, plain-vanilla index funds, the kind of exposure the industry has sold from the beginning.

Active strategies and income products dominate product announcements, but the flow data say advisors still start with broad market exposure, diversification, and cost. State Street's head of US wealth, Allison Bonds Mazza, told InvestmentNews the half-year numbers suggest investor priorities have not shifted as much as the headlines imply.

Bonds Mazza is not a neutral observer. The Treasury Department picked State Street's S&P 500 ETF (SPYM) as the default investment for the new Trump Accounts program, giving a generation of new savers a low-cost indexing entry point. The firm also packed private credit into an ETF, the State Street IG Public & Private Credit ETF (PRIV), widening access to an asset class that was once effectively limited to institutions and high-net-worth investors.

She warned that low-cost ETFs are not interchangeable. Expense ratios matter, but so do index construction and methodology, fund size, liquidity, trading spreads, tracking efficiency, and issuer stability.

The record flows are arriving as wealth managers become product manufacturers themselves. PWD counted sixteen private-market fund launches in a single month in mid-August. Those launches sit on top of the passive pile.