ETF vs Mutual Fund Statistics (2026)

Mutual funds are still the bigger pool. At year-end 2025, US mutual funds held $31.4 trillion in net assets versus $13.4 trillion in exchange-traded funds, according to the ICI's 2026 Fact Book (see the table below). Together with closed-end funds and unit investment trusts, US-registered funds managed about $45.1 trillion.

But the trend line is unmistakable. ETFs now hold 30% of all US investment company assets, up from just 2% in 2003, and 89% of that ETF money sits in low-cost index funds. The story of ETFs vs mutual funds is less about which is bigger today than which way the money is heading.

ETF assets went from $2.5 trillion at year-end 2016 to $13.4 trillion in 2025, more than a fivefold jump (see the chart and table below). Even the 2022 bear market only dented the total for a year before the climb resumed, hitting $10.3 trillion in 2024 and $13.4 trillion in 2025.

That growth is powered by relentless inflows. ETF net share issuance rose from $284 billion in 2016 to a record $1.47 trillion in 2025, and the annual figure has topped $500 billion every year since 2020. New products help too: ETFs charge low fees and are easy to launch, so the menu keeps expanding.

Flows are where the ETF-versus-mutual-fund contest is decided, and it is lopsided. In 2025 ETFs took in a record $1.47 trillion while long-term mutual funds saw net outflows, a pattern that has held for years (see the table below). Morningstar pegged 2025 as the strongest year for overall US fund inflows since 2021.

The detail is telling: taxable bond funds drew a record $540 billion in 2025 and active ETFs alone gathered more than $450 billion, while roughly $386 billion left actively managed funds overall (Morningstar). Investors are not just choosing ETFs, they are choosing cheaper vehicles of every kind.

It is easy to write mutual funds off, but $31.4 trillion is a lot of inertia. Much of it is locked inside 401(k) plans and IRAs, where mutual funds and target-date funds remain the default. US households hold 94% of long-term mutual fund assets, and 72.7 million households owned mutual funds in 2025.

Retirement plumbing explains the stickiness. Employer plans often do not offer ETFs, and target-date mutual funds (used by about 71% of 401(k) participants) rebalance automatically in a way ETFs historically have not. So mutual fund assets keep growing on market gains even as new money flows elsewhere.

Cost is the clearest reason for the shift. On an asset-weighted basis, equity mutual funds averaged 0.40% in 2025 while index equity ETFs charged just 0.14%, and index equity mutual funds were cheaper still at 0.05% (see the chart and table below). Actively managed equity mutual funds averaged 0.64%.

Fees have collapsed across the board. Since 1996 the average equity mutual fund expense ratio has fallen 62% and the average bond mutual fund 57%, per ICI's fund-fee report. Index equity ETF fees alone dropped 59% since 2009 as scale and price competition drove them down.

ETFs are often called the low-cost champion, but on fees the index mutual fund actually edges them out. In 2025 index equity mutual funds averaged 0.05% asset-weighted versus 0.14% for index equity ETFs, and index bond mutual funds 0.05% versus 0.09% for index bond ETFs.

Two things explain the gap. Index mutual fund assets are concentrated in a handful of huge, ultra-cheap S&P 500 funds, and those funds are larger on average ($14.6 billion) than the typical index ETF ($6.2 billion), so they benefit more from economies of scale. The ETF advantage is tax and tradability, not always the raw fee.

This is where ETFs pull decisively ahead, especially in taxable accounts. In 2025 only about 7% of ETFs paid a capital gains distribution, versus 52% of mutual funds (see the chart and table below). For equity funds the split was starker: 6% of ETFs versus 57% of mutual funds, per State Street data.

A capital gains distribution is a taxable event you cannot avoid: even if you never sold a share, a mutual fund can hand you a tax bill in December. Because so few ETFs trigger these, an ETF investor in a taxable brokerage account typically keeps more of their return year to year.

The tax edge is structural, not luck. When large investors leave an ETF, the fund can meet redemptions in kind, handing over baskets of stock instead of selling holdings for cash. That in-kind mechanism lets the fund flush out its lowest-cost-basis shares without realizing a taxable gain.

A mutual fund has no such valve. When shareholders redeem, the manager often must sell securities to raise cash, and any gains from those sales get passed to everyone still in the fund. That is why the tax gap persists even between an index ETF and an index mutual fund tracking the same benchmark.

Zoom out and the real divide is not ETF versus mutual fund but active versus passive. Index funds of both types held 52% of long-term US fund assets at year-end 2025, up from 40% in 2020 and just 19% in 2010 (see the table below). Total index assets reached $19.3 trillion.

Morningstar clocked the crossover: passive funds overtook active for the first time in 2023 and widened the lead in 2024 and 2025. Index ETFs did most of the heavy lifting, rising to 31% of long-term assets while index mutual funds held 21% and everything actively managed fell to 48%.

The flows follow the scoreboard. Morningstar's Active/Passive Barometer has repeatedly found active funds had less than a coin-flip's chance of both surviving and beating their average passive peer over the long run. In 2024, foreign-stock pickers succeeded just 37% of the time.

There are pockets of active strength, particularly in fixed income and real estate, where success rates topped 60% in 2024. But the broad pattern, fewer than half of active funds outperforming and higher fees dragging on returns, is exactly why investors keep rotating into index ETFs and index mutual funds.

Structure drives behavior. ETFs trade on an exchange all day at market prices, so you can buy or sell instantly, use limit orders, and see a live quote. Mutual funds price once a day after the close at net asset value, and orders fill at that single end-of-day price.

That liquidity is why ETFs get used as fast-moving tools. ETF secondary-market trading averaged 28% of all daily US stock-market trading in 2025, and peaked near 32% during the volatile 2022 market, as investors reached for ETFs to hedge and reposition quickly.

The ownership bases differ. In 2025, 56.4% of US households (76.0 million households, 128.7 million individuals) owned funds, and nearly 20 million households held ETFs specifically. ETF owners skew younger and more risk-tolerant: 54% said they would take above-average or substantial risk, versus 25% of all households.

Advisers are pushing the shift. By 2024, full-service brokers had 35% of client household assets in ETFs and fee-based advisers 49%, up sharply from 10% and 17% a decade earlier. As advice moved to flat fees, the incentive to sell load-bearing mutual funds faded.

The ETF story is not just American. Global ETF assets hit a record $19.85 trillion at year-end 2025, up 33.7% from $14.85 trillion a year earlier, with a record $2.37 trillion of net inflows, per ETFGI. The industry spanned 15,807 products from 967 providers across 65 countries.

Actively managed ETFs, once a novelty, reached a record $1.92 trillion globally, showing the wrapper is spreading beyond plain index tracking. Even so, the US remains the center of gravity, holding a bit more than half of worldwide regulated fund assets ($44.8 trillion of $88.0 trillion).

For a taxable brokerage account, the data tilts toward ETFs and index funds: lower average fees and far fewer surprise capital gains distributions mean more of the return stays yours. An index ETF or index mutual fund tracking a broad benchmark captures the market at a rock-bottom cost.

Inside a 401(k) or IRA, the tax advantage of ETFs mostly disappears (those accounts are already tax-sheltered), so a cheap index mutual fund or target-date fund is often just as good and easier to automate. The through-line is the same either way: keep costs low, favor index over active, and let the vehicle fit the account.