U.S. ETF Launches Surge by 25% in Q1 2025 Amid High Demand
United States, Tuesday, 1 April 2025.
A record-breaking 208 new U.S. ETFs launched in Q1 2025, marking a 25% increase from the previous year fueled by substantial investor interest, driving active ETF assets over $1 trillion.
Record-Breaking Growth in ETF Market
The U.S. ETF market has demonstrated remarkable vitality in early 2025, with total assets under management now exceeding $10 trillion as of March 2025 [3]. This milestone comes as the industry has significantly outperformed previous projections, surpassing earlier forecasts by approximately $2 trillion [3]. The surge in new product launches has been particularly noteworthy, with some industry experts projecting up to 1,000 new ETF launches by the end of 2025 [4].
Active Management Takes Center Stage
A significant trend emerging from this growth is the dominance of actively managed funds. Of the new launches in 2025, approximately 200 out of 233 funds are actively managed [4]. This shift toward active management has culminated in a historic achievement, with total assets in actively managed ETFs recently crossing the $1 trillion mark [1]. The momentum behind active ETFs is further evidenced by their attracting $116 billion in investments this year, compared to $179 billion for passive ETFs [4].
Market Challenges and Industry Evolution
Despite the robust launch activity, the ETF industry faces notable challenges. According to Citi Research, approximately one-third of existing ETF products are not covering their operating costs [3]. The market has become increasingly crowded, with over 4,000 ETFs listed in the U.S., and around 500 products at risk of closure or strategic changes if they cannot achieve sustainability within five years [3]. This situation has led to predictions of an annual closure rate approaching 300 funds in the coming years [3].
Future Outlook and Investor Sentiment
The industry’s growth trajectory appears set to continue, with 95% of investors planning to increase their ETF allocations in the next 12 months, according to a March 2025 Brown Brothers Harriman survey [1]. Looking ahead, industry experts project U.S.-listed ETF assets could reach $20 trillion by the end of the decade [3]. However, the sustainability of this growth may depend on how well new products perform, particularly in the active management space, where higher costs could impact long-term viability [1].