This year’s whiplash headlines and thrashing in equity markets have done little to slow down the ETF industry.
While tariff and economic news have commanded investor attention, exchange-traded funds issuers have kept busy: they’ve churned out more than 230 new products in the US, a record for a first quarter in data going back to 2015. In comparison, the first three months of 2024 — a year which ended up seeing both a record 700-plus launches and more than $1 trillion in fund inflows — saw 174 brand-new ETFs, data compiled by Bloomberg show.
Issuers, including a growing number of asset-managers or even research shops that are debuting products for the first time, are seeing opportunities in a space that’s been attracting massive amounts of cash from institutional and retail investors alike, mostly at the expense of mutual funds. If the breakneck speed of more than 75 new ETFs on average coming to market every month continues, over 900 new ETF products could debut this year. Some industry participants say that number could go even higher.
To Amrita Nandakumar, president of ETF sub-adviser Vident Asset Management — whose clients have debuted funds in recent days — it’s possible 1,000 new products launch this year.
“The increased adoption of ETFs by financial advisers represents the most significant factor driving the momentum of new ETF launches,” she said. “Financial advisers and retail investors are voting with their dollars for the ETF as the premier investment vehicle of choice.”
Bloomberg Intelligence’s Athanasios Psarofagis, also says it’s conceivable a record 1,000 new ETFs launch this year as issuers are “following the money.”
More than 200 of the new 233 funds that have kicked off trading this year are actively managed, the data show. Those funds have launched into a segment of the industry that’s seen explosive growth, with total assets held by actively run ETFs in the US recently hitting the $1 trillion milestone. Industry experts project further gains and new floods of cash — already in 2025, active funds have attracted $116 billion, compared with passive’s $179 billion haul, which still overall makes up a bigger slice of the ETF assets pie.
Should the Securities and Exchange Commission approve a way for issuers to create exchange-traded fund share classes of their mutual funds, a widely expected development with uncertain timing, that count could go even higher.
Lately, new products are “more trading-oriented, and that works because the market has been volatile,” Psarofagis added.
Many of the new ETFs are derivatives-based or offer leverage on single stocks, which can amplify investors’ returns, but also their losses — a pitfall especially for the amateur traders who are embracing the funds. And many more such products are expected to come to market this year, with one issuer recently applying for more than 70 new leveraged and inverse funds all in a single filing.
This year has seen the inauguration of vehicles that seek to offer two-times the daily returns of quantum firm IonQ Inc. as well as juiced-up offerings on companies like Reddit Inc. and Hims & Hers Health Inc. An Iceland-themed ETF also debuted, as did a number of crypto-centric offerings, including the first-ever funds tracking futures in Solana.
Still, industry veterans are sounding a note of caution, considering that a large chunk of ETFs fail to attract the necessary attention and cash to keep afloat. So far this year, 40 funds have closed, Bloomberg-compiled data show.
“A lot of people create funds in a vacuum — they think there’s a need and they say everybody should buy this,” Joe Grogan, head of distribution Americas at WisdomTree, said in an interview at the Exchange ETF Conference in Las Vegas. “It is incredibly difficult to launch a fund today. And it’s not just because of the regulatory hurdles and so forth: trying to get someone to purchase your fund is hard.”
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