ICI: Investors Shift Billions From Mutual Funds to ETFs

The Investment Company Institute reported weekly fund flows for the week ended July 1, 2026, showing exchange-traded funds attracted $32.3 billion in net new issuance while long-term mutual funds recorded $28.87 billion in net outflows. Total long-term fund industry flows were a net weekly inflow of $3.43 billion.

Equity flows were the sharpest contrast. Equity ETFs took in $19.70 billion, led by $16.27 billion into domestic equity ETFs and $3.42 billion into world equity ETFs. Traditional equity mutual funds posted $29.91 billion in net outflows, including $22.10 billion from domestic equity mutual funds and $7.81 billion from world equity mutual funds. Hybrid products saw $316 million flow into ETFs and $2.69 billion in outflows from mutual funds.

Fixed income flows favored ETFs as well. Bond ETFs captured $14.94 billion in net issuance, with $13.15 billion in taxable bond ETFs and $1.79 billion in municipal bond ETFs. Bond mutual funds recorded $3.73 billion of net inflows, split between $3.00 billion in taxable bond funds and $726 million in municipal bond funds.

Data from Morningstar through March 2026 shows ETFs represented an average 55% of model portfolio allocations, up from 43% five years earlier. Custom model portfolio assets reached $258 billion at the end of March 2026, a 40% increase year over year. At year-end 2025, model portfolios had an asset-weighted average fee of 0.35%, compared with 0.61% for unbundled mutual funds. Allocation models were about 0.25 percentage points cheaper than the lowest-cost mutual funds across 10 core Morningstar categories.

Advisors and industry participants cited lower fees, intraday liquidity and tax efficiency as factors behind manager and client choices. ETFs trade throughout the day while mutual funds price once daily after the market close. ETF creation and redemption mechanics can reduce taxable capital gains distributions to shareholders, and advisors noted ETFs allow faster rebalancing and simpler substitutions within model-driven accounts.

The ICI weekly figures document ETF inflows across both equity and fixed income segments for the week and concurrent net redemptions from traditional long-term mutual funds.