Long-term US funds brought in $765 billion in 2025, with assets growing 2.5% relative to year-end 2024. On an absolute basis, the annual inflow was the second-largest in the past decade, trailing only 2021. Taxable-bond funds were responsible for the bulk of inflows, while allocation funds and US equity funds drove outflows for the year. December’s $149 billion of inflows were by far the highest of any month in 2025, as US equity funds had a strong bounceback and experienced their most significant inflows of the year.
A Banner Year for Taxable-Bond Fund Inflows
The $540 billion inflow into taxable-bond funds for the year was the group’s largest annual inflow in history and made up 70% of total long-term US fund inflows in 2025. The only outflow came in April; each subsequent month saw at least $50 billion of inflows. While passively managed taxable-bond funds took in over 55% of the year’s inflows, actively managed funds still had a strong year. Only two of 27 taxable-bond Morningstar Categories experienced outflows in 2025, and more conservative categories like ultrashort bond and intermediate core bond represented a large portion of inflows.
US Equity Funds Continue to Bleed Active and Smaller-Cap Assets
US equity funds gathered more than $52 billion in December, denting 2025’s total outflow of more than $32 billion. Passive flows favored large-cap categories, collecting more than $380 billion in passive assets in 2025, largely from exchange-traded funds tracking the S&P 500, such as Vanguard 500 Index VFIAX ($103 billion inflow) and iShares Core S&P 500 ETF IVV ($78 billion). But that couldn’t offset $386 billion moving out of active funds. Active growth funds of all sizes suffered outflows. Small- and mid-cap categories of all styles experienced consistent outflows throughout most of 2025, though mid-cap blend funds had a solid December.
International Equity Attracts Investors With Strong 2025 Performance
International-equity funds enjoyed their eighth consecutive monthly inflow in December, helping push the 2025 net flow past $57 billion. Performance likely contributed to the move abroad, as the Morningstar Global Markets ex-US NR Index posted a 31.6% increase in the year. The 2025 inflow was the first sustained influx of cash since 2021, with passive inflows of about $160 billion overcoming active outflows of about $100 billion.
Passive Continues to Separate From Active
Since passive funds surpassed active funds in total net assets back in 2023, they’ve continued to gain market share of the US funds universe. As of year-end 2025, passively managed funds made up over 55% of net assets, increasing from 53% the year prior. This trend shows no signs of reversing; however, active managers in certain asset classes are faring better than others.
Passive Giants Keep Growing
For a fourth consecutive year, iShares led all fund families in inflows, bringing in $366 billion, the largest annual uptake for any firm in history. The brand now manages 11% of assets in the long-term US funds market, the second most in the industry, as the firm continues to pull away from Fidelity and chip away at Vanguard’s lead. Still, Vanguard remains the overwhelming leader in assets under management, with over $35 trillion and a 28% market share. Vanguard’s $240 billion inflow in 2025 was the second largest, with State Street a distant third. Together, these four firms managed 55% of long-term US assets at year-end.
Active ETFs Shoot for the Stars
Exponential growth among active ETFs did not subside in 2025, nor did the accelerated launching of active ETFs. Since 2016, the total number of active ETFs has risen by over 1,200%, and they have nearly doubled in the past two years. Total assets in active ETFs have risen from $52 billion in 2016 to nearly $1.5 trillion in 2025, growing 64% in 2025 alone. With an annual inflow of roughly $450 billion, active ETFs shone brightly. Investors continue to be drawn to active investing with built-in tax efficiencies and lower costs: a glimmer of hope for an otherwise gloomy time for active funds.
Gold Shines in 2025
Commodities-focused funds, dominated by precious metals and especially gold funds, had a bumper year in 2025, hauling in more than $54 billion of inflows. That easily topped 2020’s $39 billion, the previous record (although 2025’s haul was lower on an organic-growth-rate basis). Per-ounce gold prices continued to set records over the year, which added to the allure of the sparkly asset.
This article is adapted from the Morningstar Direct US Asset Flows Commentary for December 2025. Download the full report here.