AI did not write this ETF column

I will be the first to admit that I have started integrating artificial intelligence (AI) tools to assist in my typical weekly workload. Given the sheer number of ETFs currently listed in the United States (4,500 and counting), AI can really help with data crunching on a wide variety of industry trends. One area that I have yet to engage in AI is in the writing of this newsletter; for better or worse, I feel I am cheating my readers if the prose is not my own voice. The topic of using AI for writing content was front and center during a recent dinner conversation with my son, who is currently a high school junior. He brought home a book report essay he had written recently in class, which to my surprise was done in longhand. I will try to summarize his words:

“Dad…here’s what’s happening. Pretty much the entire class was using AI to write their essays, and the teachers knew this. So, the teachers were using AI detection tools and would give students a 0 if the detector thought it was AI-generated. But then some students found an AI tool that could detect the detection mechanism so it would not be flagged. At that point, the teachers were either going to use this new tool to detect the detection of the detectors or else just make us write it all by hand. That’s why I had to write my essay in class on paper.”

Welcome to parenting a high school student in 2025! Holy cow! As my family discussed and debated how students should (or should not) be using AI, part of me was ecstatic that my son had to write his book report without any computer help. And as usual, whenever one of these topics arises on the home front, my mind cannot help but draw comparisons to the ETF industry. 

I’m now in the middle of my third decade inside the ETF arena and sometimes it is hard to fathom the breadth of this industry. Looking back, how quaint that many of my first blogs were explaining the merits of considering alternatives to market-cap weights when constructing equity indexes. ETFs can now hold everything from digital assets to private credit to levered single stocks, often in both an index and active form. As Dorothy from the Wizard of Oz might say, “I’ve a feeling we’re not in Kansas anymore.”  

But just as my son is writing assignments without the aid of a computer, the ETF industry has not exactly forgotten its past. The headlines might highlight all the new and exciting things that can fit inside an ETF, but my sense is that investors still like some of the old-school “boring” stuff. I looked at the ETF net inflows in the United States—now at almost $800 billion¹—and was curious how much went into categories such as US and international large-cap equities as well as ultrashort and intermediate core bond. I was pleasantly surprised that those four categories alone account for almost half of new ETF money in the United States.² I would even argue that my definition of “boring” here is too stringent, and that the percentage is probably even higher. 

Full confession. Yes, Franklin Templeton is looking into enhancing our ETF digital asset capabilities, which could include the tokenization of ETFs. Yes, we are looking into ramping up our alternative ETF lineup. However, when I look at our net inflow ETF leaderboard for 2025, I see funds that hold large-cap value and international low volatility/high dividend equities. I am not sure this constitutes walking and chewing gum at the same time, but I do think there is a world in which my son can simultaneously leverage all these exciting new AI tools while still possibly scoring an “A” on an essay he wrote while completely unplugged.