ISLA Americas: A boom in ETFs, but with limited players
17 October 2025 US
Image: Anita/stock.adobe.com
Exchange traded funds (ETFs) have existed as an asset class since 1993, but over the last couple of years, there has been record issuance. This activity is creating further discussion for the securities finance space on its place in the market.
Speakers of the 鈥楾he ETF Engine 鈥� Growth, Lending & its Role as Collateral in a Competitive Landscape鈥� session explored the trends, risks, and opportunities of ETFs 鈥� a US$15 trillion market which is expected to double in the next few years.
According to the panel鈥檚 experts, this year alone will welcome the issuance of over 1000 new ETFs, which follows on from last year鈥檚 record issuance. But that is not all.
In terms of net new money for ETFs, one speaker noted that in 2024 it had reached US$1 trillion, but only three quarters into 2025, this asset class has already hit the US$1 trillion mark 鈥� this is only expected to increase, with Q4 typically known for higher activity in this respect.
The ETF wrapper itself has been a key catalyst in the growth of this asset class. With many uses around tax efficiency, transparency, and tradability, this alone has driven a lot of investors, at the expense of mutual funds. One speaker noted how active mutual funds in the equity space have 鈥渄efinitely lost some of their sheen鈥�.
In a nutshell, the wrapper itself has drawn in a lot of investors of the new generation, with data indicating how new DIY investors 鈥渓ove鈥� the wrapper, a panellist added.
Active ETF launches is a particular trend that is drawing much attention from the market also, with approximately 400 launching in the first half of 2025. A desirable wrapper aside, this trend is being pushed by the lower costs associated with active ETFs, compared with a mutual fund with the same strategy.
Looking at the bigger picture, one speaker noted that eight per cent of the US$12 trillion AUM in US ETFs is in active ETFs. As the number of ETFs has proliferated, what has not yet followed is asset AUM growth 鈥� but even that is seeing changes this year. It seems the active ETF world is here to stay.
While there were a number of considerations to keep in mind for ETFs, including around client eligibility in regards to accepting ETFs as collateral, one panellist commented that there are not enough players in this space to support this ETF growth.
They noted that there are less dependencies on market structure and on a very small audience of players that support and maintain the ETF community and ecosystem. Adding to this, they commented how some are 鈥渘ot fully aware鈥� of just how few ETF market makers exist and how few authorised participants exist, and that is a risk to the industry.
Speakers of the 鈥楾he ETF Engine 鈥� Growth, Lending & its Role as Collateral in a Competitive Landscape鈥� session explored the trends, risks, and opportunities of ETFs 鈥� a US$15 trillion market which is expected to double in the next few years.
According to the panel鈥檚 experts, this year alone will welcome the issuance of over 1000 new ETFs, which follows on from last year鈥檚 record issuance. But that is not all.
In terms of net new money for ETFs, one speaker noted that in 2024 it had reached US$1 trillion, but only three quarters into 2025, this asset class has already hit the US$1 trillion mark 鈥� this is only expected to increase, with Q4 typically known for higher activity in this respect.
The ETF wrapper itself has been a key catalyst in the growth of this asset class. With many uses around tax efficiency, transparency, and tradability, this alone has driven a lot of investors, at the expense of mutual funds. One speaker noted how active mutual funds in the equity space have 鈥渄efinitely lost some of their sheen鈥�.
In a nutshell, the wrapper itself has drawn in a lot of investors of the new generation, with data indicating how new DIY investors 鈥渓ove鈥� the wrapper, a panellist added.
Active ETF launches is a particular trend that is drawing much attention from the market also, with approximately 400 launching in the first half of 2025. A desirable wrapper aside, this trend is being pushed by the lower costs associated with active ETFs, compared with a mutual fund with the same strategy.
Looking at the bigger picture, one speaker noted that eight per cent of the US$12 trillion AUM in US ETFs is in active ETFs. As the number of ETFs has proliferated, what has not yet followed is asset AUM growth 鈥� but even that is seeing changes this year. It seems the active ETF world is here to stay.
While there were a number of considerations to keep in mind for ETFs, including around client eligibility in regards to accepting ETFs as collateral, one panellist commented that there are not enough players in this space to support this ETF growth.
They noted that there are less dependencies on market structure and on a very small audience of players that support and maintain the ETF community and ecosystem. Adding to this, they commented how some are 鈥渘ot fully aware鈥� of just how few ETF market makers exist and how few authorised participants exist, and that is a risk to the industry.
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