An ETF a Day Keeps Outflows Away

Overview:

• In 2025, an average of 1.4 Canadian ETFs and 3.8 U.S. ETFs are launched every trading day.
• Active ETFs are a major driver of growth, accounting for over 60% of new launches in Canada and over 85% in the U.S. this year.
• Single stock ETFs and crypto ETFs are particularly popular in Canada, while single stock leveraged ETFs and option strategy ETFs are in high demand in the U.S.
• FOMO is driving many issuers to launch similar products quickly, leading to crowded market segments.
• The rapid growth in the ETF industry presents challenges, including intense competition, fee compression and resource constraints for market makers.

The rapid growth of ETFs globally and the urge to create real estate in the world's fastest growing investment vehicle has sent new ETF launches into overdrive. The previously measured pace of ETF introductions allowed for more focus on new issuings as the industry rose to prominence. However, those days may be in the rearview mirror. With every new year, new launch records are broken across the ETF world, further moving the bogey for the question of how many ETFs are too many ETFs. Whatever the number, it undoubtedly is yet to be determined. Now, well over one ETF is launched every trading day in the U.S. and Canada, making ETF launches routine.

On average, more than one Canadian ETF launches every trading day. To be exact, an average 1.4 Canadian ETFs are launched every trading day. In the U.S., this number is even larger with an average 3.8 new ETFs launched every trading day. There are still many trading days in 2025, and at this pace the Canadian and U.S. ETF markets are likely to end the year with averages over one and three new ETFs launched per day respectively.

As of August, there were 211 new ETFs launched in Canada, and in the U.S., 570 new ETFs had launched. In comparison, there were 229 Canadian ETFs and 729 U.S. ETFs listed for all of 2024. Both the Canadian and U.S. ETF markets are on track this year to have the highest numbers of new listings ever.

New ETFs Launched Per Year

New ETFs Launched Per Day

Net new ETFs also continue to rise at a record pace given that the number of ETF delistings remain relatively stable year-over-year and continue to be much smaller than the new launches this year. For example, there were 174 delistings in the U.S. in 2024 and around 90 delistings year-to-date. In Canada, there were 63 delistings in 2024 and 38 delistings year-to-date.

The Drivers Behind Fast ETF Growth

There are many factors contributing to this fast growth. One strong force is the popularity of active ETFs. In Canada, over 60% of new launches in 2025 are active ETFs. In the U.S., active ETFs account for over 85% of new launches this year. The increasing popularity of active strategies among ETF investors has largely boosted the number of ETFs. Many traditional mutual fund shops are bringing their active strategies to the ETF space, and this is all before the ETF share class is approved in the U.S. More importantly, some active ETF strategies that resonate with investors — such as single stock ETFs in both Canada and the U.S., option strategy ETFs in the U.S. and CLO ETFs in Canada — all have contributed to the fast growth in the number of ETFs. In addition, crypto innovations in the Canadian market also brought several new ETFs; some of these ETF launch trends are highlighted below:

The Surge of Single Stock and Crypto ETFs in Canada

Single Stock ETFs:

In Canada, there have been 30 single stock ETFs launched this year across three issuers. These ETFs are all based on popular U.S. stocks and aim to provide yield enhanced and/or leveraged exposure. Year-to-date, single stock yield enhanced ETFs have accumulated CA$1.1 billion in inflows. Among these ETFs, some employ 1.25x leverage with covered call strategies while others only write covered calls. This year, single stock covered calls + 1.25x leveraged ETFs accounted for over 88% inflows into single stock yield enhanced ETFs. This year, single stock leveraged ETFs were first launched in Canada. Although it is still early days, more issuers may come to the space given the popularity of these ETFs in the U.S.

Crypto ETFs:

The Canadian ETF market welcomed several crypto innovations this year, including the first spot Solana and XRP ETFs in North America. These ETFs attract some investors' interest, especially retail investors. Currently, there are nine Solana ETFs and seven XRP ETFs in Canada.

In addition to the Solana and XRP ETFs, Canadian ETF issuers also launched eleven Bitcoin ETFs. These ETFs include lightly leveraged bitcoin, covered call and/or lightly leveraged bitcoin and low-cost bitcoin options. More strategies may be launched on other crypto assets over time.

CLO ETFs:

This year, five Canadian ETF issuers raced to launch eight CLO ETFs. All these ETFs were launched in April and May and have accumulated over CA$400 million within four months.

Popularity of Single Stock ETFs and Option Strategies ETFs in U.S.

Single Stock ETFs:

There were 130 single stock ETFs launched in the U.S. this year. Note that new launches are mostly single stock leveraged ETFs. Since the first single stock ETF launched in 2022, these ETFs have been very popular in the U.S. This year, single stock leveraged ETFs accounted for ~20% of total ETF launches. Note that this year, single stock ETFs not only cover large-cap names but also start to cover small-cap names. In addition, there are also several single stock yield enhanced ETFs launched this year.

Option Strategies ETFs:

Another fast-growing area is ETFs with option strategies. In the U.S. this year, there were over 150 option strategy ETFs launched. Equity buffer and covered call strategies have been the most popular. It is worth highlighting that these 150 new launches have accumulated over US$4 billion inflows this year, indicating strong demand for these products in the U.S.

Fear of Missing Out (FOMO) Contributes to New Launches

The increasing popularity of ETFs is one of the main drivers of the surge in number of ETFs. However, a more important reason behind the phenomenon is fear of missing out (FOMO). Once a novel product idea comes to the ETF market, many ETF issuers rush and launch several similar products. As an example, Canadian ETF issuers this year rushed to launch eight AAA CLO ETFs within two months, making the space fairly crowded for the size of the Canadian market.

In the U.S., FOMO can be more severe. For example, sixteen S&P 500 option strategy ETFs were launched this year and fourteen of them are buffer ETFs. In total, there are 64 option strategy ETFs with the S&P 500 as the underlying exposure. This is making some areas of the ETF space crowded. As a more extreme example, Bloomberg recently highlighted that ETF issuers are now even filing for ETFs on single stocks that haven't yet been publicly traded.

Challenges Ahead for a Growing ETF Pipeline

The fast growth of the ETF industry brings many opportunities but makes competition in the space even more severe. The prevalence of "me-too" products makes ETF issuers compete on fees and squeezes the margins of many providers, especially smaller ones that are less known among investors. In addition, ETF industry participants such as market makers have limited resources such as seed capital and balance sheet and can't support an unlimited number of ETFs. As a result, new products (especially from smaller issuers) in the future may face challenges securing seed partners and market makers.

This challenge could be more significant if the ETF share classes get approved. Once the floodgate opens, there may be hundreds of new ETF share classes coming to the market. Authorised participants and market makers will face more constraints on capital and balance sheet, making the launch of new ETFs more challenging.

Overall, the fast growth of the ETF industry has brought more investors, products, issuers and market makers into the space. With more than 4,000 ETFs in the U.S. and 1,700 ETFs in Canada, the competition is intense. As a result, many issuers have rushed to launch new products to seize opportunities. However, new ETFs must offer unique strategies or cost advantages to attract investors. From an issuer's perspective, new ETFs need to gather assets, otherwise the mounting costs will lead to closures.

From a market maker's perspective, resource constraints may also limit the total number of ETFs that can be launched in the market. Until we attain that equilibrium, the pace seems like it will continue making new ETF launches routine.