ETF Industry Sees Record-Breaking Surge Amidst Derivatives Boom

The US ETF industry has seen an unprecedented surge in launches this year, with over 390 new funds hitting the market in just two months. By early May, 370 new ETFs had already been listed, surpassing last year's tally of 290 by the same point. This number continued to grow, reaching a total of 953 launches by late July, putting the industry on track to break its all-time annual record of 1,095 set in 2021.

A significant proportion of these new ETFs use derivatives, with a record-high 50% incorporating options, swaps, or futures contracts. This has led to a surge in leveraged and inverse products, with over 701 now available on the market - more than double the count from December last year. Some of these funds have already gained significant assets under management, with AI-focused offerings crossing $3 billion.

Meanwhile, 85% of this year's new launches are active strategies, meaning a human or algorithm is making decisions about what to buy and sell. The crypto ETF space has also seen growth, with multiple spot Bitcoin and Ethereum ETFs launching this year. This follows the momentum gained when regulators first approved spot Bitcoin ETFs.