It was already a historic year for the U.S. ETF industry, which celebrated its 30-year anniversary in 2023. But as we pause to consider that significant moment, we should also realize the marketplace is still achieving fresh milestones.

For instance, new fund launches are at record levels in 2023, on pace to eclipse the 475 new entries two years ago. In September, there were more than 69 funds christened, a record monthly high.

The frantic pace will continue as firms try to meet year-end corporate goals. And what’s more interesting is that many of these funds are active, not passive.

“About 70% of all ETF launches year to date have been active,” said Douglas Yones, head of exchange-traded products at the New York Stock Exchange, in the September episode of my podcast, First Look ETF. During the first three-quarters of this year alone, 21 active ETFs were launched by 13 different asset managers.

The top three active ETFs by assets are the JPMorgan Equity Premium Income ETF (JEPI), with $28.49 billion; the JPMorgan Ultra-Short Income ETF (JPST), with $23.06 billion; and the Dimensional U.S. Core Equity 2 ETF (DFAC), with $20.11 billion.

While big active funds continue to dominate, the overall backdrop for the entire active category has been bright.

The sheer number of active ETFs with positive cash flow has reached 749, which is nearly 65% of all ETFs. This is an increase of 5% from the first half of 2023.

Where have asset flows been flooding to?

In the active market, stock funds led the inflows during the first three quarters, gathering $62.3 billion. Domestic equities were favored by investors, taking in $47 billion while foreign equities gathered $15.3 billion.

Fixed-income flows trailed their equity peers, taking in just $17.8 billion. Investors plowed $9.6 billion into bond ETFs with global exposure.

What are the key takeaways?

Active ETFs continue to claim their stake in the ETF ecosystem. Industry-wide, active ETFs have amassed an impressive $443.37 billion in assets. Just five years ago, combined assets in all active ETFs hovered around $70 billion.

An important sub-trend in the active ETF space is the number of mutual funds being converted into ETFs.

At the beginning of this year, the NYSE projected that 15 or more issuers would complete their conversions of funds totaling more than $20 billion. Those projections are close to being realized.

The ETF industry has many other positive developments to look forward to besides the boom in active ETFs.

The expansion of spot-priced bitcoin and ethereum ETFs is on the horizon and will open up an entirely new asset class for many investors.

Moreover, there’s another seismic shift in May 2024, when the Securities and Exchange Commission is shortening the settlement date of trades to one day after the trade date from two. This will make it more likely that ETFs will become readily available inside 401(k)s and other employer-sponsored retirement plans.

Advisors observing, and even participating, in these massive shifts should expect more records ahead for the fast-evolving ETF market.