By Andrew Welsch

Investors have been pouring money into exchange-traded funds and asset flows into ETFs are now forecast to top $2 trillion for 2026, which would beat last year's record of $1.5 trillion, according to a new report from State Street Investment Management.

This year has already been a bonanza for fund flows, with U.S.-listed ETFs pulling in more than $1 trillion in the first six months of this year, according to the report by Matthew Bartolini, global head of research strategists at State Street Investment Management. During the second quarter, ETFs brought in a record $560 billion. State Street's report said that is a new record for any quarter and three-month period.

"If the year ended today, the first six months of 2026 would rank as the third-largest full calendar year total on record," the report finds.

Investors have been attracted to ETFs for years because they are tax-efficient and easy to trade. More recently, asset management companies have been launching hundreds of new ETFs to meet investor demand. With more strategies and asset classes in their preferred investment vehicle, investors have been moving billions of dollars into ETFs.

Near $16 trillion. Market appreciation and strong net new asset flows have pushed total U.S.-listed ETF assets to $15.8 trillion. That is a new high-water mark for ETF assets, according to State Street.

The report shows investors weren't buying just U.S. stock funds; non-U.S. ETFs attracted $228 billion, representing 34% of equity inflows. That is well above their current 20% share of total assets, according to the report.

And it isn't just index funds. Actively managed strategies have also done well in attracting investor dollars. State Street's report says active ETFs, including equity and fixed-income strategies, brought in $74 billion in June, a new record, and $398 billion this year.

In the fixed income sector, investors have been seeking funds focused on shorter duration bonds, in part because of lingering concerns over stubbornly high inflation. This year, short-term government bond ETFs have brought in $58 billion in net new assets in contrast to $6.5 billion of outflows from long-term government bond ETFs.

Inflation-linked bond ETFs have added net new assets for 17 of the last 18 months, according to the report, which describes the trend as a reflection of inflation concerns. Inflation-linked U.S. Treasuries have outperformed U.S. Treasuries this year by 1.1% versus 0.6% and over the past 12 months by 3.4% versus 2.7%, the report states.

Ultrashort-bond ETFs were the most sought after in the actively managed fixed income category. "This reflects the desire to use active to seek excess returns or higher income opportunities as indexed based core exposures remain challenged in this fragmented macro world," the report states.

Write to Andrew Welsch at andrew.welsch@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.