ETF landscape is shifting as income, active management and crypto gain ground

Bloomberg reports equity ETFs still draw the bulk of investor flows, while income strategies, active ETFs and crypto are increasingly being incorporated into model-driven portfolios, according to panels held at the ETFs in Depth event.

Equity ETFs continue to attract the largest share of investor flows, and their role as core long-term equity exposure is being reinforced. Market performance has been heavily influenced by the so-called "Magnificent Seven," which the article mentions now account for roughly a third of the S&P 500. Panelists at the ETFs in Depth event in December 2025 discussed how model portfolios, index design and pricing discipline are shaping which products scale. The discussion also covered evolving income strategies, the rise of active ETFs and growing institutional engagement with crypto. Notable points: - The article reports that equity ETF inflows remain closely correlated with S&P 500 movements, suggesting buy-and-hold use of ETFs even during stressed periods like the Covid-19 selloff. - It mentions that the "Magnificent Seven" — Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla — now account for about one-third of the S&P 500, and panelists noted these firms are diversified platforms rather than narrowly focused companies. - Model portfolios are increasingly determining which ETFs scale; portfolios generally use low-cost core index exposure plus satellite sleeves for income, leverage, tax planning or tactical positions, and small index-rule differences can produce material performance gaps. - Bloomberg Intelligence data cited in the article shows roughly 33% of ETF inflows go to active products and about 83% of new ETF launches are actively managed, while active ETFs still represent about 10% of total ETF assets. - Income strategies have shifted from traditional dividend products toward options-based and structured approaches often described as "Yield 3.0," and buffer ETFs are being used as partial substitutes for fixed-income allocations. - The piece reports limited crypto outflows during a recent drawdown (about 4% exited) and notes institutional changes such as Vanguard lifting internal crypto restrictions and BlackRock's spot Bitcoin ETF (IBIT) reaching roughly $100 billion in assets, as reported. Summary: ETFs remain central to portfolio construction, with equity funds continuing to draw the largest flows while income, active management and crypto expand their presence. Index design, creation/redemption capacity and pricing discipline were highlighted as key factors that shape which ETF products gain scale. Experts at the event said model-driven frameworks are increasingly channeling these developments and will influence how ETFs are deployed in the coming years.