ETFs increasingly replace traditional mutual funds in US and Germany

The investment landscape is seeing a significant structural shift as Exchange-Traded Funds (ETFs) increasingly replace traditional mutual funds. In the United States, this transition is characterized by direct product conversions. Since 2021, 203 mutual funds have been converted into ETFs, with over $260 billion in volume transferred through this process. This trend is driven by investor demand for lower costs, increased trading flexibility, and tax efficiencies.

In Germany, the shift is occurring primarily through capital reallocation rather than direct fund conversions. The popularity of ETFs is evidenced by record inflows in the US, which exceeded $500 billion in the first quarter of 2026, a 17 percent increase year-over-year.

Specific products like the Schwab U.S. Dividend Equity ETF (SCHD) highlight the appeal of certain ETF strategies. SCHD focuses on high-quality companies with consistent dividend growth and strong cash flow, holding 102 stocks across sectors such as healthcare, consumer staples, and energy.