The first half of 2025 saw a surge in active ETF launches, with 396 new products introduced—nearly seven times the number of new active mutual funds (58) and over six times the number of new passive ETFs (60). This dominance underscores a major shift in investor and issuer preferences toward the ETF structure for active management.
Active ETFs Lead in New Fund Launches
Note: excludes money market funds, closed-end funds, 529 funds, target-date series, and ETMFs
Several factors contribute to this trend:
- Operational efficiency: ETFs offer intraday liquidity, lower costs, and tax advantages compared to mutual funds.
- Regulatory flexibility: Rule changes have made it easier for asset managers to bring active strategies to market via ETFs.
- Investor demand: There’s growing appetite for transparency and flexibility, which ETFs provide more readily than traditional vehicles.
This shift suggests that active ETFs are no longer niche products—they’re becoming the preferred format for delivering active strategies.
Record-Breaking Momentum
With 396 launches already in the first six months, active ETFs are on pace to break the previous annual record of 575 launches set in 2024. This rapid growth reflects not just continuation but an acceleration of the trend.
Key drivers of this momentum include:
- Innovation in product design, such as single-stock ETFs and defined outcome strategies, which accounted for 104 and 60 launches respectively.
- Broader adoption by traditional asset managers, who are increasingly choosing ETFs as the vehicle for their flagship active strategies.
- Market conditions: In a volatile or uncertain environment, active management can offer more responsive positioning, making ETFs an attractive delivery method.
If this pace continues, 2025 could mark a transformational year for the ETF industry, solidifying active ETFs as a core component of the investment landscape.
Diverse Strategies Fuel Growth
Note: excludes money market funds, closed-end funds, 529 funds, target-date series, and ETMFs
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By: Alan Hess, Vice President, ISS Market Intelligence
