Morningstar: 3 ETF Trends to Watch During 2025's Second Half

In the first half of the year, investors poured $540 billion of new money into exchange-traded funds, and firms launched 464 new ETFs, according to data from Morningstar.

Some of the research firm’s ETF predictions for 2025 have already come to fruition, including active ETFs outnumbering their passive counterparts and the Vanguard S&P 500 ETF (VOO) surpassing the SPDR S&P 500 ETF Trust (SPY) as the world’s largest ETF. 

But in the second half of the year, Zachary Evens, a manager research analyst for Morningstar, told etf.com that public-private ETFs, ETF share classes and even more active ETFs are the trends to watch. 

Growing Comfortability with Private Asset ETFs, PRIV

A major discussion in the ETF space centers on the arrival of private market investing. State Street and Apollo Global Management introduced the SPDR SSGA Apollo IG Public & Private Credit ETF (PRIV) in February—a first-of-its-kind private credit ETF. The fund has $139.4 million in assets under management and, while flows were initially muted, they’ve since picked up. State Street filed for another private credit ETF, the SPDR SSGA Short Duration IG Public & Private Credit ETF, in May.

Evens said he thinks investors will slowly become more comfortable with these relatively illiquid securities in such liquid vehicles as the ETFs establish track records and gain assets.

“Hopefully, we get more transparency also on what's going on behind the scenes to make investors comfortable—that the ETF is delivering what it says it delivers,” he added. 

Potential Approval of ETF Share Classes

ETF share classes haven’t been approved yet, but Evens expects that will change in the latter half of the year. Firms like Thornburg Investment Management are already seeking approval to offer these ETF/mutual fund hybrid structures.

“When that's approved, there should be a lot happening in the space,” Evens said, adding that it’s unclear whether the SEC will approve filings one by one or in a batch. “It will be interesting to see how fund companies react and how quickly they're able to attach those share classes to their existing mutual funds.” 

More Active ETFs

By the end of the first half of the year, there were 2,226 active ETFs and 2,157 passive ETFs on the market. Evans said the acceleration of active ETFs is a trend investors should continue to watch in the second half of the year.

“Active ETFs only make up about 10% of the ETF universe, so despite having more active ETFs than passive ETFs, they still claim relatively little market share in the whole ETF universe,” Evans said. “It will be interesting to see not just in the second half of this year but in years to come if assets will continue to gravitate towards active ETFs and if they can take out a meaningful chunk in passive ETFs’ lead on the market share side.”

He added that a lot of the growth has been in the less traditional active space. But more fund companies are launching more traditional discretionary actively managed funds, and there has been a select success among firms that have tried that path, so a trend to watch is whether more traditional active strategies in the ETF wrapper can achieve sustained success.