Active ETFs Hit $1.5T as Retail Private Credit Slows
Goldman Sachs executives said active ETFs reached about $1.5 trillion, growing roughly 50% annually, while retail private credit may face 12-18 months of slow growth or outflows.
At Goldman Sachs’ RIA Professional Investor Forum in early May, Alex Blostein, asset management senior analyst in global investment research, reported that active exchange-traded funds have grown to about $1.5 trillion and are expanding at roughly a 50% annual pace.
Blostein described a portfolio “barbell” that many advisors are building: a liquid, tax-efficient core on one end and selective exposure to illiquid assets on the other. He estimated the active ETF wrapper has helped reverse mutual fund outflows by delivering actively managed strategies with stronger tax treatment and easier access for registered investment advisors.
On retail private credit, Blostein put the retail-facing segment at about $200 billion in net asset value and said that demand has cooled. He noted many retail private credit funds will likely see slow inflows or outright redemptions for the next 12 to 18 months while managers clear existing withdrawal requests.
Marc Nachmann, global head of asset and wealth management at Goldman Sachs, linked the slowdown to product design. He pointed out that many retail private credit offerings are evergreen vehicles that must put new cash to work immediately to cover advertised yields of 8% to 10%. “Evergreen structures required managers to deploy capital right away,” he said, while drawdown funds allow managers to hold capital and wait for better opportunities.
Nachmann added that more than 80% of Goldman Sachs’s private credit business uses institutional drawdown structures, which allow the firm to step back when valuations are rich and re-enter when pricing improves. He noted private credit typically offers about a 200 basis point premium over comparable public credit and that yields on newly originated private deals have risen roughly 100 basis points, drawing institutional investors back into the market.
Blostein raised a separate operational issue for wealth platforms: AI-powered cash optimization tools that move client sweep cash into higher-yielding money market funds or short-duration ETFs. Sweep accounts commonly pay roughly 20 to 40 basis points to clients while market interest rates sit near 3.5%; if AI tools shift sweep balances at scale, custodians could face pressure on net interest income.
If that pressure materializes, custodians might respond by raising custody fees or charging asset managers more for platform access, Blostein warned. Both executives expect AI to augment rather than replace human advisors. “Clients want to talk with a person about financial decisions,” Nachmann said, adding the firm intends to use AI to improve client experience and investment performance.
At the forum, executives presented specific figures and short-term forecasts: active ETFs at about $1.5 trillion growing near 50% annually; retail-facing private credit around $200 billion in net asset value likely to experience 12-18 months of slow growth or outflows; and potential shifts in sweep cash management that could affect custodian revenue.
