ETFs are taking over the US stock market? $350 billion poured in over two months, transaction share approaching 40%.

``` The "trading entry point" for US stocks is shifting towards ETFs. Capital flows and trading volume are both accelerating, making ETFs increasingly resemble the primary trading layer of the market rather than just allocation tools, amplifying rapid portfolio adjustments and style switching driven by macro factors. According to the latest report from Goldman Sachs ETF trader Chris Lucas, in the first two months of 2026, ETFs listed in the US attracted more than $350 billion in inflows, an 80% increase compared to the same period in 2025. In a volatile market environment, the share of ETF trading is rapidly expanding. On March 3rd, impacted by geopolitical news, the US market experienced dramatic swings, with ETF trading accounting for nearly 40% of the total US stock market transaction volume for the day, approaching a historical record. Goldman Sachs TMT expert Peter Callahan said in his daily review, "Today, ETFs were highly prominent in market activity, with genuine individual stock trading being extremely scarce." This trend indicates that ETFs have evolved from auxiliary investment tools into the core method for managing risk exposure during market volatility. Their impact on market price discovery mechanisms, liquidity structures, and even capital allocation logic is garnering widespread industry attention.

Capital Flood: $350 Billion Recorded in Two Months, Daily Inflow Averaging $9 Billion

According to Goldman Sachs data, in the first two months of this year, US-listed ETFs recorded over $350 billion in net inflows, an 80% increase compared to the same period in 2025. Based on trading days, about $9 billion flowed into ETFs per day, 52% higher than in 2025.

Looking at asset categories, domestic stock strategies still dominate, but incremental capital is tilting towards the international market far more than its current asset proportion. Among them, broad emerging markets equity ETFs already recorded $32 billion in net inflows in the first two months of this year. The scale of annual inflows is expected to set a historical record, with the inflow over the past two months already exceeding the total of several complete years in the past decade. Currently, the total assets of US-listed ETFs amount to $14.3 trillion, nearly $900 billion more than at the end of 2025. Notably, this increase significantly outpaces the performance of US stocks over the same period (the S&P 500 is up about 0.5% year-to-date), fully reflecting the driving force of continued capital inflows.

Trading Share Approaching 40%: ETFs Become Essential Risk Management Tools in a Volatile Era

The rise of ETFs is not only evident in scale but has also profoundly reshaped intraday market trading structure. Goldman Sachs data shows that over the past five years, ETFs averaged 28% of the nominal daily transaction volume of US stocks; in 2026, this proportion has risen to 32%. Two main factors drive this increase: First, widespread adoption by both institutional and retail investors has elevated baseline ETF trading volume; second, ETFs are increasingly used as "macro tools", whether for gold and silver volatility in January, software sector selloffs in February, or recent use of USO to manage oil price risk—ETFs have played a core role. Goldman Sachs reports that every increase in the VIX drives more investors to shift to ETFs for rapid risk adjustment. There are about 5,000 ETFs in the US market, offering unprecedented risk exposures and liquidity depth.

Active ETF Acceleration, Emerging Markets Enthusiasm Soars

The momentum of active ETFs continues to accelerate. In the first two months of this year, active ETFs attracted $133 billion, accounting for 38% of all ETF net inflows, up 57% year-over-year. This growth comes on a high base, with a record $470 billion in net inflows in 2025. For emerging markets, investor enthusiasm is equally remarkable. The influx into broad emerging market ETFs has amazed the market. Take South Korea as an example. According to Goldman Sachs, recent client activity in emerging market ETFs is very high, particularly for Korean market exposure. ETF EWY, which tracks the Korean market, hit a record in nominal transaction volume, and ranked second highest by share volume. In addition, gold ETFs have also seen significant buying. Goldman Sachs data shows GLD achieved its largest weekly net inflow this year last week, reaching $3.8 billion. Gold spot prices have risen for five consecutive weeks, nearing record highs.

New Products Accelerate, Scale May Surpass Mutual Funds Ahead of Schedule

In 2025, more than 1,160 new ETFs were issued in the US, almost 100 per month. In the first two months of this year, 177 new ETFs have been listed, a 16% increase from the same period in 2025. Derivatives-linked ETFs are the main driver of this round of new issuance. Over half of the new products launched this year have incorporated derivatives in their structures. Goldman Sachs expects that the advancement of ETF share class regulations will be an important catalyst for new issuance later in the year. Goldman Sachs previously forecasted that US-listed ETF assets would surpass mutual funds around 2030, but given the current inflow speed, this target has been revised up to 2029. The breakout of equal-weight strategies also demonstrates the breadth of structural change. As the yield gap between S&P 500 equal-weight and market-cap-weighted indices widens, capital is flowing out of market-cap-weighted products by 7% and into equal-weight products by 7%. Goldman Sachs notes that with uncertainty about the prospects for AI affecting multiple industries, this theme is expected to continue playing out.Risk Warning and DisclaimerThe market has risks; investment should be cautious. This article does not constitute personal investment advice and has not considered the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investing based on this article is at your own risk. ```