Wall Street's ETF assets hit $10 trillion milestone

Assets held by exchange-traded funds in the U.S. hit $10 trillion for the first time as the investor-friendly products continue their relentless takeover of Wall Street. 

A combination of inflows and market gains carried total assets over the milestone this week, according to data compiled by Bloomberg Intelligence. Investors have poured $691 billion into the funds this year, as U.S. stock gauges have notched repeated records. 

The $10 trillion now under management in American ETFs is the latest testament to how the easy-to-trade vehicles have transformed the investment landscape. Mutual funds have been bleeding assets as investors switch to the more liquid, tax-friendly structures. In turn, money managers have seen fee income slump as the low-cost products gain in popularity, and issuers have raced to offer ever-more complex strategies in the wrapper. 

READ MORE: The top 20 small-cap ETFs of the past decade

The growth has been "incredible," says Amrita Nandakumar, president of Vident Asset Management, especially since the ETF ecosystem touched the $1 trillion milestone just 14 years ago.

"ETFs now offer nearly universal access to asset classes and strategies that were once available only to the world's most sophisticated institutional investors," Nandakumar said. That's a "testament to how much ETFs have democratized investing."

With nearly 3,800 funds in the market, the ETF universe is roughly on pace to break its record for launches and inflows, data compiled by BI show, with Vanguard Group taking in 32% of all flows, the company's third-best year. In terms of new debuts, the actively managed and those that use derivatives or leverage account for 80% as issuers seek to innovate in a bid to capture market share. 

"ETFs are showing themselves as the vehicle of choice for investors," said Jillian DelSignore, global head of investor distribution strategy at Nasdaq Global Index Group. "We're going to continue to see new exposures put in the wrapper. You're seeing it already with the evolution into private markets and also continued development of outcome oriented strategies."