The people want ETFs. And in those ETFs they want equities … and crypto.

Those are the two most important categories to retail investors, according to data from a survey commissioned by BlackRock, which included 5,000 respondents in July and August. The report, published Thursday, shows changing priorities, particularly among young investors. While 66% of US investors said they owned individual stocks, 43% reported holding mutual funds. Bonds (29%), crypto assets (27%) and ETFs (23%) were behind. Still, ETFs are the fastest-growing category, and investors who already own them said they are most likely to buy equity (83%) and crypto (36%) funds during the next year. But among those who don’t yet own ETFs and plan to, there is nearly equal demand for equity (51%) and crypto (47%).

“We’re witnessing a pivotal moment as individual investors embrace ETFs for their efficiency and transparency,” BlackRock head of US direct investing Amy Jenkins said in an announcement. “The predicted surge in first time ETF investors reflects a broader shift in investor preferences toward simplicity, accessibility and digital-first experiences.”

An ETF Buffet to Rival Golden Corral

Next year, of course, they’ll have plenty of options. The Securities and Exchange Commission has all but turned on a fire hose for new products, recently allowing the big exchanges to use generic listing standards for new ETFs. That’s a golden ticket for issuers who have been waiting for months to launch spot-price crypto ETFs, including those focused on a smorgasbord of meme coins. Some products have already started coming to the market, the most recent of which include index funds of spot crypto: the 21Shares FTSE Crypto 10 Index ETF (TTOP) and FTSE Crypto 10 ex-Bitcoin Select Index ETF (TXBC). Those ETFs, which launched Thursday, apply market cap weightings and hold a variety of Swiss-domiciled crypto exchange-traded products to fill in where spot-price products are not yet available domestically. Another Thursday debut was the Canary Capital XRP ETF (XRPC).

“It feels just like another S&P 500 ETF,” said Federico Brokate, global head of business development at 21shares, which has a tagline for the products similar to what index fund investors are used to hearing: “Stop chasing coins. Start owning the market.” Unlike most spot crypto products, the two new ones are registered as 1940 Act (rather than 1933 Act) products.

As to why investors choose ETFs, per the BlackRock survey:

• Diversification across companies and markets (47%)
• Ease of buying and selling (40%)
• Potential for returns (37%)

In Bitcoin They Trust: This all bodes well for BlackRock, which conveniently, is the world’s dominant asset manager, biggest ETF issuer and operator of the largest crypto ETP, the iShares Bitcoin Trust, which now represents about $80 billion. Only a few weeks ago, that ETF was poised to hit $100 billion in assets, though falling Bitcoin prices and a few days of net outflows have dragged its AUM down by $17 billion. It’s a reminder, especially for those new to investing, that if they like the idea of crypto, they better like volatility.

The Lone Star State may have just one star, but its ETFs are numerous.

Three issuers have now launched or filed for funds that hold companies specifically based in Texas, which has enticed hundreds of businesses to relocate there, including crypto trading platform Coinbase and X (formerly Twitter). Horizon Kinetics filed this month for a product that would place 80% of its holdings in Texas-based securities, following iShares, which launched its own Texas-focused ETF earlier this year. The funds give investors a simple way to bet on the success of firms headquartered in the state, and the trend is likely to continue as more corporations seek tax breaks and issuers pursue narrower and narrower niches, experts said.

“If you look at Texas relative to some other states, the environment for these businesses is really good,” said Carlos Pena, a portfolio manager at Texas Capital, which has several ETFs focused on the state. “It’s a result of all of the policies, infrastructure [and] talent pools we have that companies can come and succeed.”

All My ETFs Live In Texas

Texas has no state income taxes for individuals or corporations, and its laws are generally favorable to businesses, such as one that limits shareholder lawsuits against corporations. The state is also favorable to people moving there, Pena said, not just companies, making it an economic engine. “Texas has more Tier 1 research universities than any other state, so we have that talent pipeline,” he said. “[People are] also moving to Texas because the cost of living is significantly lower … relative to New York and California.”

Still, niche strategies come with risks. Much of the Texas economy is dependent on oil production, a sector that’s experiencing slowing growth. Performance of Texas-focused funds is also mixed:

• The iShares Texas Equity ETF (TEXN), which is down 1.8% after launching in June, tracks an index of companies based in Texas.
• The Texas Capital Texas Equity Index ETF (TXS), which began trading in mid-2023 and tracks Texas companies weighted by both their contribution to the state’s overall GDP and their market cap. TXS is up 9% year to date.
• Texas Capital’s small cap equity index fund (TXSS) is down 3% year to date.

All Signs Point to TX. Earlier this year, the New York Stock Exchange also launched the NYSE Texas, which is aimed specifically at companies located in the southwestern US, and another exchange, the Texas Stock Exchange, or TXSE, is set to launch next year. More ETFs focused on Texas will arrive in the months to come, Pena said.

That didn’t take too long.

Several major asset managers are crossing asset milestones in their ETF businesses amid a record year for inflows industrywide. Capital Group’s three-year-old line of ETFs just hit a total of $100 billion in assets under management. Of course, no one comes close to BlackRock’s iShares or Vanguard, which at $3.9 trillion and $3.7 trillion are the dominant players in the market. But the rising profile of Capital Group, and other semi-recent entrants like T. Rowe Price, highlights the demand for new exchange-traded funds — and actively managed ones in particular.

“We didn’t have them for a long time,” said John Queen, fixed income portfolio manager at Capital Group. “Even when active [ETFs] became available, we wanted to really make sure we understood the details of how they were going to play out and what the transparency meant before we started them up.”

Wind in the Sales

About $1.1 trillion poured into US ETFs this year through October, which was more than in all of 2024. Of that, $378 billion went into active ETFs. Total assets are now more than $13 trillion. Some of the other firms that recently surpassed or are about to hit assets-under-management milestones:

• Invesco is nearly at $800 billion across its 240 US ETFs, according to data from VettaFi.
• Goldman Sachs crossed over the $50 billion mark among its 45 US ETFs.
• T. Rowe Price now has more than $20 billion in its line of 24 ETFs.

Model Behavior. As niche ETF issuers have flooded the market with leveraged and thematic new funds, Capital Group and many other big asset managers have kept a focus on core-style products. To help distribute those ETFs, firms have increasingly added model portfolios. The top area where they’re building out models is now in active ETFs, according to a recent report from Morningstar. As of March, when Capital Group launched its first active ETF model portfolios, the firm was the third-largest provider, at $61 billion in assets under management, behind Wilshire ($68 billion) and BlackRock ($168 billion).

“It has been an incredibly important connection with our clients and advisors, because it’s what they wanted all the time,” Queen said of Capital Group’s model portfolios and funds of funds. “It’s been a huge and important growth area for us.”