$2 Trillion By Year’s End? A Wild First Half Look Back in ETFs

Dave Nadig, President & Director of Research at ETF.com and Sumit Roy, Senior ETF Analyst at ETF.com, were joined in this week’s ETF Zoo by Cinthia Murphy, Director of Research at TMX VettaFi; Jeffrey Ptak, Managing Director at Morningstar; and Todd Sohn, Senior ETF & Technical Strategist at Baird Strategas. Discussions covered a mid-year check-in of flows, congressional support for low-fee products, SpaceX ETF performances, and developments in the leveraged space. 

Prefer to watch this conversation? You can do that here or on our YouTube channel. This episode also streaming on Spotify and Apple Podcasts. 

Mid-Year Highlights

• Record flows, growing scrutiny: ETF inflows have hit roughly $1 trillion at the halfway mark of 2026, putting the industry on pace for $2 trillion by year-end, with Sumit Roy noting gains spread far beyond the usual mega-cap funds. Jeff Ptak also recapped his congressional testimony, noting broad support for low-cost, transparent products even as the SEC’s new 26-question comment request raises questions about whether new product approvals are being genuinely reformed or simply streamlined.

• AI dominates the performance leaderboard: While the S&P 500’s 10% first-half return is solid, it pales next to leveraged and single-stock AI/semiconductor ETFs, some up nearly 1,000%, with even country funds like Korea and Taiwan effectively functioning as chip-sector plays. The Zoo crew noted that niche winners, like a tanker ETF that spiked during the Strait of Hormuz shutdown, often fail to attract lasting assets without a compelling ongoing narrative.

• SpaceX access funds deliver a mixed verdict: With SpaceX’s Nasdaq-100 buy-in looming, Jeff Ptak’s tracker of four SpaceX-exposure vehicles showed inconsistent results, heavy outflows in some cases, and possible pulling forward of returns ahead of the IPO. Cinthia Murphy argued the appeal was less about performance and more about investors using these funds as a stopgap until direct SpaceX exposure became available.

• Leverage costs and fee wars heat up: Leveraged and inverse ETFs now account for about 17% of total ETF trading volume, roughly $500 billion in notional exposure, which Todd Sohn warned could amplify volatility and create hidden counterparty risks. Meanwhile, a new low-cost issuer is undercutting established leveraged ETF fees by half, setting up a test of brand loyalty in a historically high-margin corner of the industry.

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