ETF Prime: Five Flow Trends Emerge in 2026

Core Insights - The ETF industry is projected to reach $1.8 trillion in inflows by 2026, having already attracted approximately $150 billion in January 2026, building on a record $1.5 trillion in 2025 [1] Group 1: Active Fixed Income ETFs - Active fixed income ETFs are leading bond flows, capturing around 40% of all fixed income inflows in 2025, with the Pimco Active Bond ETF (BOND) alone gathering over $2 billion in January 2026 [1] - Other active products such as iShares Flexible Active ETF (BINC), Fidelity Total Bond (FBND), and JPMorgan Income ETF (JPIE) also experienced strong demand [1] Group 2: Thematic ETFs - Thematic ETFs are shifting focus from artificial intelligence to defense and drones due to geopolitical concerns, with the Global X Defense Technology ETF (SHLD) attracting over $1 billion in January and showing a 20% increase for the year [1] - The Rex Drones ETF (DRNZ) has gained 29% since its launch in October 2025, holding approximately $60 million in assets [1] Group 3: Diversification Trends - Investors are beginning to diversify away from mega-cap stocks, as evidenced by the Invesco S&P 500 Equal Weight ETF (RSP) pulling in $5 billion in January 2026 after experiencing $3 billion in outflows in 2025 [1] - The State Street Financial Select Sector SPDR ETF (XLF) gained nearly $4 billion this year following $1 billion in outflows last year, indicating a sector rotation [1] Group 4: Precious Metals and Crypto ETFs - Despite silver prices rising 65% this year, the iShares Silver Trust (SLV) saw $2.5 billion in outflows, attributed to short-term trading rather than long-term investment [1] - Gold has increased nearly 25% and has attracted almost $5 billion in inflows [1] - Crypto ETFs are the only category with outflows in 2026, with the Grayscale Bitcoin Trust ETF (GBTC) outflows offsetting inflows from BlackRock's iShares Bitcoin Trust ETF (IBIT) and Fidelity Wise Origin Bitcoin Fund (FBTC) [1] - A recent survey indicated that 32% of advisors now allocate to crypto in client accounts, up from 22% [1] Group 5: Private Credit Market - The private credit market offers yields of approximately 15%, significantly higher than the 4.8% for investment-grade and 6.5% for high-yield options [1] - The Simplify VettaFi Private Credit Strategy ETF (PCR) utilizes business development companies and closed-end funds to provide daily liquidity with a proprietary credit hedge to mitigate drawdowns [1]