In recent months, the global ETF product issuance has entered a new "acceleration phase." In the U.S. market alone, approximately 794 new ETFs were launched in the first nine months of 2025, surpassing the total for the entire year of 2024. This trend reflects the active expansion of asset management companies between passive and active management, as well as between traditional and innovative themes.
First, in terms of scale, the dual-line expansion of "quantity + strategy" is quite significant. In the third quarter, over 200 ETFs were launched in the U.S., bringing the total number of new issuances over the past four quarters to more than 800. The types of strategies are also continuously evolving: expanding from traditional broad-based index funds to fixed income, alternative assets, leveraged/inverse, and even crypto asset-related ETFs. For example, recent news indicates that the U.S. market will launch the first ETFs linked to cryptocurrencies such as Litecoin, Hydra, and Solana. Globally, emerging markets, defense technology, and the digital economy have also become focal points for new ETFs.
Secondly, regarding the issuers, both large traditional management institutions are expanding their ETF offerings, such as Lazard Asset Management converting its "Emerging Market Opportunities" fund into an ETF; at the same time, white-label platforms, multinational issuance mechanisms, and the geographical diffusion of ETF issuance are also strengthening, making the global ETF ecosystem more diverse.
Several driving forces behind this wave of ETF issuance are worth noting:
Cost and scale advantages: As low-cost and highly transparent investment tools, ETFs are favored by both regulators and investors, prompting management institutions to accelerate product launches.
Diversification of market demand: Against the backdrop of rising interest rates and changes in capital market structures, investors' demand for fixed income, alternative strategies, and thematic investments (such as AI, new energy, and crypto assets) has increased, driving product expansion.
Mature regulatory and issuance mechanisms: Especially in the U.S., the regulatory environment has a clear review process for ETFs, allowing institutions to launch innovative products more quickly. The introduction of crypto ETFs is a result of the gradually clarified regulatory path.
Globalization and regional expansion: In addition to the U.S. and European markets, Asia and emerging markets are also actively launching ETFs. For example, the Indian market has introduced its first Flexi Cap ETF, further promoting the popularity of ETF products in the local market.
In terms of opportunities, new products mean more segmented markets, more thematic choices, and more strategic tools available for investors to build portfolios. For management institutions, this represents both a chance for differentiated competition and a path for scale expansion. For instance, launching active management strategies in ETF form could attract funds shifting from traditional funds to ETFs.
However, challenges cannot be overlooked:
Increased homogeneity risk: A large number of products may redundantly cover the same index, theme, or strategy, leading to fierce competition, compressed fees, and diluted management returns.
Liquidity and scale bottlenecks: New ETFs that cannot quickly accumulate scale may face issues of poor liquidity, large tracking errors, and high costs. Investors often prefer products that have established scale and are widely recognized.
Concerns about excessive issuance leading to bubbles: The market is cautious about the "explosion" in the number of ETF issuances, worrying that this expansion may exceed actual demand.
Regulatory and compliance risks: As alternative assets, crypto assets, and leveraged/inverse strategies are included in the ETF category, regulatory scrutiny and investor risk identification requirements are also increasing. If there are issues with product design, disclosure, or liquidity structure, it could damage trust.
In the next 1-2 years, several key trends in the ETF market are worth paying attention to:
Expansion of active management and fixed income: With changes in the interest rate environment, active strategies and fixed income ETFs will receive more attention.
Deepening of themes and segmented strategies: Themes such as AI, digital economy, new energy, national defense security, and crypto assets will continue to attract issuance attention.
Regional expansion and development of cross-border products: The speed of ETF issuance in emerging markets will accelerate, and the integration of localization and globalization will become the new norm.
Platformization and white-label issuance: More asset management institutions will quickly launch products through third-party issuance platforms, accelerating their entry into the ETF ecosystem.
Accelerated survival of the fittest: In an environment of large-scale issuance, ETFs with strong scale, liquidity, and transparency will prevail, while poorly designed products with insufficient differentiation may be eliminated.
Overall, the current issuance of ETF products is in an "acceleration phase": the synergy of market demand, issuance mechanisms, and regulatory frameworks is driving this trend, but it is also accompanied by rising competition, homogeneity, liquidity, and regulatory risks. For investors, a broader selection certainly brings opportunities, but how to filter out "suitable and sustainably competitive" products is key; for management institutions, while the number of issuances is important, product differentiation, scale breakthroughs, and operational efficiency will determine long-term success or failure. In the future, those who can strike a balance between quantity and quality may stand out in this wave of ETF enthusiasm.
Related: The easing of expectations for a U.S.-China tariff truce calms market fears, Bitcoin (BTC) stabilizes.
Original article: “ETF Product Boom: Opportunities and Risks Amid Accelerated Launches”
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