Small cap ETFs have so taken a flows hit in 2025, but the story looks much better for the actively managed ones.

Alexander "Alex" Ellwanger Fues Research Network Senior Research Analyst

Last week, Alex Ellwanger, senior research analyst at Fuse Research Network, released new analysis of year-to-date fund flows for domestic small cap ETFs, including 40 active ETFs and 94 passive ones. (Ellwanger's analysis draws on flows data from the folks at Morningstar.)

As of May 31, passive U.S. small cap ETFs had suffered $12.6 billion in net YTD 2025 outflows, Ellwanger notes. On the flip side, in those same five months, $4.7 billion net flowed into active U.S. small cap ETFs.

"Dimensional, [American Century's] Avantis, JPMorgan, and Fidelity captured 88% of net inflows into active small cap ETFs in 2024," Ellwanger states, while noting that they aren't the only 2025 winners in the space. "Ten other issuers each attracted between $25 million and $333 million in 2024, signaling room for differentiated strategies with focused distribution."

If the domestic small cap ETFs flows trends from the first five months of the year continue throughout the rest of 2025, it would be a significant reversal in the space. Ellwanger notes that passive U.S. ETFs dominated U.S. small cap ETF flows in each year from 2020 through 2024 (with big flows gaps in each year except 2022).

"Passive outflows from these strategies likely reflect asset allocation adjustments as investors seek opportunities in international and emerging markets after years of overweighting U.S. markets," Ellwanger states about U.S. small cap ETF flows for the first five months of 2025. "YTD results may also suggest interest in active domestic allocations." 

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