The U.S. ETF industry is growing at breakneck speed — but not without raising eyebrows. With over 794 new ETFs launched in the first nine months of 2025, the market is on pace to top 1,000 new products this year, surpassing all previous records and prompting warnings of a potential ETF bubble.
📈 The Expansion Continues
Fueled by regulatory changes since 2019 and the SEC’s approval of ETF share classes, asset managers are rolling out products faster than ever — from actively managed ETFs to those leveraged 3x or even 5x on single stocks.
However, this surge has many market veterans calling for caution.
“We’re certainly at an unsustainable level of launches,” said Drew Pettit, U.S. Equity Strategist at Citigroup, warning that “product rationalization and closures” are inevitable.
⚠️ Market Structure Pressures
- Market-makers such as Citadel Securities and Jane Street Capital are flagging capacity concerns, saying they’ll be more selective about which funds they support.
- Financial advisers now expect new ETFs to reach at least $200 million AUM before recommending them — double historical norms.
- The SEC itself recently said it’s “unclear” whether new 3x–5x leveraged ETFs comply with leverage rules, amid broader market volatility.
💬 Industry Voices
Morningstar’s Dan Sotiroff warned that the growth of leveraged single-stock ETFs could add systemic risks.
Meanwhile, Pacer ETFs CEO Sean O’Hara remains optimistic:
“There are more ETFs than listed stocks — but after all, there are more words than letters in the alphabet.”
💡 Context:
ETF inflows crossed $1 trillion year-to-date, and total U.S. ETF assets are now above $13 trillion. Despite record flows, the industry is entering a phase where selectivity, innovation discipline, and regulatory oversight will determine survival.