Entering 2025, the exchange-traded fund (ETF) industry has recorded record numbers with investments in these funds reaching 1.1 trillion USD in 2024 - the highest in the 35-year history of ETFs. According to reports from Reuters, this rapid development is driven by a strong bullish market in the U.S. along with the emergence of crypto and options-based products, which are still preferred by investors over mutual funds due to lower costs and higher liquidity.
However, according to Bryan Armour, an ETF analyst at Morningstar, 2025 could see a new record in the number of ETFs that have to close. While 186 funds were shut down in 2024, most of which had assets under 250 million USD, this number is expected to rise to a new record.
The explosion of new ETF products, including a range of altcoin products, recorded 714 new products launched by the end of 2024, surpassing the figure of 543 from the previous year. Notably, these products focus on managing, limiting, and emphasizing risks through options, such as the ETF line that can help investors achieve their target returns.
A highlight of 2024 was the outstanding success of the GraniteShares 2x Long Nvidia ETF with a growth rate of 177%, attracting over 3.5 billion USD in new assets. This could be a sign that 1 trillion USD is becoming the new standard for capital inflows into ETFs.
Although this market is growing strongly, managers still face the risk of overload due to increasingly fierce competition and continuous demands for innovation. The sustainability of a product depends not only on its uniqueness but also on its ability to attract enough interest to maintain its existence.
With many challenges ahead, the future of the ETF industry in 2025 could be fascinating with many new initiatives, especially in the area of coin and altcoin products. It is reported that the global ETF market reached a milestone of 14 trillion USD by the end of December 2024, a significant leap from 11.6 trillion USD the previous year.
Source: Reuters.