For the second consecutive month, the industry saw a noticeable slowdown in new ETFs launched in May. However, even amid this more restrained launch period, the underlying trend of innovation continued to be a driving force within the ETF space.
May witnessed a subdued ETF launch environment. It saw only 52 new funds brought to market during the month. This marks the year's lowest monthly figure. That's a 29% drop from March, which saw the highest number of launches in 2025 to date.
ETF launches in May were overwhelmingly dominated by equity funds. Those accounted for 79% of all new offerings, a typical trend in the market. Notably, actively managed ETFs continued their upward trend. Those made up 87% of the new offerings, according to FactSet. Interest in active ETFs has been consistently strong for the past 18 months. That underscores the evolving landscape of the investment industry, where investors are increasingly seeking diverse strategies and innovative solutions to achieve their financial goals.
The overall launch numbers dipped in May. But the YTD figure of 370 ETF launches surpassed the previous year's 237 at the same point.
U.S. ETF assets under management saw a rise from $10.48 trillion to $11.05 trillion in May. And monthly inflows increased by 25% from April to $87.7 billion. Interestingly, flows into equity ETFs in May declined to its lowest level in 2025. Meanwhile, flows into fixed income ETFs tripled compared to April. They accounted for 44% of net new assets in May, per FactSet. YTD flows totaled $465 billion at the end of May. That potentially positioned the industry for another record-breaking year.
Most Innovative ETFs Launched in May
The overall number of ETF launches declined in May. Yet the broader data for the month indicates a robust market where fewer, but potentially more strategically focused and innovative ETFs, are being introduced.
Among the most innovative ETF launches in May came from issuers Invesco, Volatility Shares, Innovator, and Strategy Shares. While passive ETFs were considered, each of the most innovative ETFs launched in May is actively managed.
The Invesco QQQ Hedged Advantage ETF, launched on May 7, is an active ETF that invests in a portfolio of equity securities designed to track the performance of the Nasdaq 100 Index. Additionally, Invesco’s team of option-based experts will implement an option overlay strategy to manage downside risk.
The option overlay strategy is designed to partially hedge the ETF’s downside exposure when equity markets decline.
QQHG charges 45 basis points.
The Volatility Shares XRP ETF launched on May 22. The fund fills a role as the first-ever futures ETF for the cryptocurrency, providing advisors with more options for customizing client portfolios.
XRPI offers investors 1x exposure to the price movement of XRP, the fourth-largest cryptocurrency by market cap. Notably, the firm also launched the Volatility Shares Trust XRP 2X ETF (XRPT), which provides amplified exposure to XRP price movement.
The fund charges 94 basis points.
The Innovator Equity Managed 100 Buffer ETF, launched on May 12, indicates the expansion of Innovator Capital Management’s selection of downside-protected ETFs.
BFRZ aims to offer capital appreciation while limiting portfolio vulnerability to potential losses. The fund was built to offer higher return potential and built-in downside protection compared to the unknown hedging capabilities of bonds, and the poor performance of various hedge funds, according to the firm.
Notably, the ETF blends the characteristics of Innovator's Managed Floor strategies with higher upside capture potential than traditional Defined Outcome ETFs, according to Cinthia Murphy, investment strategist at VettaFi. The fund's use of a laddered options approach means it's an easy-to-implement strategy for advisors that doesn't require an annual reset that is common with Buffer ETFs.
BFRZ charges 89 basis points.
Strategy Shares and Rareview Capital launched the Strategy Shares Monopoly ETF on May 16. MPLY invests in companies that demonstrate “Monopolistic Attributes,” which includes companies with recognized brand dominance, regulatory exclusivity, and substantial market share, among other factors.
MPLY’s approach represents an opportunity for advisors to capitalize on differentiated market dynamics through a core exposure to multiple companies. MPLY’s defined focus on companies with Monopolistic Attributes extends to organizations that either individually dominate a market with limited to no competition for its products or services or dominate a market collectively with one or more other companies that sell similar products or services with limited to no competition.
MPLY charges 79 basis points.
For more news, information, and analysis, visit the Innovative ETFs Channel.
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