Group 1: Industry Consolidation - The industry is expected to see consolidation, highlighted by Goldman Sachs' acquisition of Innovator ETFs, with over 400 unique ETF brands and 4,000 products in the market [1] - Raymond James' acquisition of Clark Capital Management Group indicates a trend, with expectations of three to five meaningful deals in the current year [2] Group 2: Smart Beta ETFs - Predictions suggest inflows for smart beta ETFs will double from $37 billion to $75 billion, with the Invesco S&P 500 Equal Weight ETF (RSP) being the fourth-largest fund by flows this year [3] - The record for smart beta inflows was set at $103 billion in 2022 [3] Group 3: Crypto Index ETFs - Skepticism exists regarding the prediction that crypto index ETFs will triple assets from $1.7 billion to $5 billion, as year-to-date flows have primarily gone to bitcoin and ethereum funds [4] - A survey indicated that 42% of advisors prefer crypto index ETFs over individual tokens [4] Group 4: International Equity and Fixed Income ETFs - Predictions on international equity and fixed income ETFs breaking records are endorsed, with bond ETFs capturing 32% of total flows this year, up from 29% last year [5] - Flows are shifting from short duration to the belly of the curve, approximately six years duration [5] Group 5: Active ETFs - Active ETFs experienced record inflows of $580 billion in 2025, contrasting with active mutual funds that had $640 billion in outflows [6]

Group 1: ETF Issuer M&A Activity - Goldman Sachs announced the acquisition of Innovator Capital Management for $2 billion, expected to close in Q2 2026, enhancing its ETF offerings in defined outcome ETFs, which have grown to over $80 billion industrywide [2][4] - The acquisition aims to address Goldman's stagnant ETF business by integrating a specialized product suite from Innovator, which has a proven track record [3][4] - Predictions indicate multiple transactions in 2026, with larger asset managers acquiring smaller ETF issuers, highlighting a trend towards consolidation in the ETF industry [5][6] Group 2: Smart Beta ETFs Resurgence - Smart beta ETFs, which combine elements of passive and active management, have seen a resurgence with several asset managers launching new products that align with smart beta principles [7][8] - The smart beta ETF category currently holds approximately $1.1 trillion in assets, with predictions of inflows doubling to $75 billion in 2026, driven by investor interest in systematic, factor-targeted portfolios [11][12] Group 3: Growth of Crypto Index ETFs - Spot crypto ETFs attracted around $35 billion in inflows in 2025, following a favorable regulatory shift in the U.S. under new SEC leadership [13][14] - The crypto index ETF category is expected to triple in assets to over $5 billion in 2026, as more investors seek diversified exposure to cryptocurrencies through index-based products [19] Group 4: International Equity ETFs - International equity ETFs experienced record inflows of approximately $250 billion in 2025, surpassing the previous record of $198 billion in 2021, with expectations for further growth in 2026 [24][26] - Factors such as last year's international outperformance and stretched U.S. equity valuations may drive reallocations towards international equity ETFs [26][27] Group 5: Fixed Income ETFs - Fixed income ETFs saw inflows of roughly $450 billion in 2025, significantly exceeding the previous record, with predictions for continued growth in 2026 [29][31] - Key drivers for this growth include capital migrating from money market funds and expectations of lower interest rates, which may prompt advisors to reallocate portfolios towards fixed income ETFs [32][35]

ETF Market Trends - Year-to-date net ETF inflows have topped $645 billion [1] - Active ETFs accounted for approximately 25% of flows in June, while passive ETFs accounted for 75%, indicating active ETFs are gaining ground [3] - Over the last 12 months, US equities have seen approximately five times the inflows of international equities, but in the last month, international equity has overtaken US equity [4] Investment Opportunities - Non-US investments have benefited from a tailwind due to the dollar, with a difference of around 10% between hedged and unhedged returns [7] - Small caps have not been favored in the US, but have performed well in non-US developed markets and emerging markets over the last five years [7][8] - American Century suggests considering international developed small cap strategies like ABDV and ABDS, with ABDV recently surpassing $10 billion in total assets under management [11] - Small cap companies with good valuations and profitability have historically been some of the best performers long term in US, non-US developed markets, and emerging markets [14] Market Outlook - Optimism surrounds potential trade deals, which is viewed as a positive factor [6] - Uncertainty in the current trade environment may create niche opportunities for small cap companies [15][16] - Diversification through exposure to smaller companies can provide opportunities often overlooked by large-cap focused strategies [13]