There has been significant press coverage around the explosion of ETFs in the U.S., with headlines boasting that there are now more ETFs than listed equities—a statistic that has sparked numerous discussions about their market impact. However, this narrative tends to be overstated. In reality, mutual funds still outnumber listed equities by a wide margin.
Shifting Market Composition
Let’s take a step back and review what has occurred over the last 5 years. In 2019, the ETF Rule accelerated the issuance of ETFs, making it much easier to bring an ETF to market. Since then, over 2,600 have been launched. More recently, issuance has been even stronger, with over 1,300 ETFs coming to market since 2024 alone. Notably, over 80% of the ETFs launched have been active. Active ETFs have rapidly grown their presence, now accounting for over 53% of the total ETFs. For perspective, active ETFs composed only 10% of the market at the time of the ETF Rule. The number of passive ETFs has been relatively stagnant over the last 5 years, hovering around 2,000 ETFs.
Why Has Active ETF Issuance increased? (Guide to ETFs slide 9)
Issuance: AUM and Flows
Should the market be concerned about this rapid pace of issuance or the sheer number of ETFs? Looking beneath the surface, the number of ETFs doesn’t tell the whole story. Most new ETFs have AUM: for those launched since 2024, the average AUM is about $230 million, but the median is only $25 million. In fact, roughly 875 have less than $50 million in AUM, underscoring that many launches fail to attract significant assets. Many still have their seed capital intact.
Examining ETF flows, the number of ETFs has nearly doubled since 2020, yet the proportion seeing substantial inflows has remained steady. In 2025, only 7% of all ETFs—fewer than 300 out of the more than 4,300—have attracted flows above $500 million, and just 18% have gathered more than $100 million. In 2020, 10% of all ETFs attracted flows above $500 million, and 24% gather more than $100 million.
Critical Factors for ETF Success
While launching an ETF is easier than ever, success requires strong portfolio management, disciplined risk oversight, effective distribution, and compelling marketing. Without these elements, an ETF will likely remain small and fail to stand out. The funds that do succeed typically offer something investors genuinely want—whether it’s access to a timely theme, a differentiated strategy, or a well-priced solution—and pair that with robust distribution networks.
The proliferation of ETFs may capture attention, but the real story lies in which funds gather significant inflows—and why. The industry doesn’t need more products—it needs better ones, built on strong fundamentals, thoughtful design, and genuine investor demand.