ETFs continue to attract record assets globally, active ETF launches are accelerating, and asset managers on both sides of the Atlantic are increasing their focus on the wrapper as both a distribution and growth channel. ETFGI reported that US ETF assets reached US$15.69 trillion by May 2026, while active ETF assets globally reached US$2.49 trillion. In Europe, EFAMA reported that active UCITS ETFs have grown 385% between 2019 and 2024.
The largest ETF providers have already established scale, and many large and mid-sized asset managers have either launched ETF products or are actively developing capabilities. Recent SEC filings and fund conversion activity in the US suggest that firms continue to view ETFs as an increasingly important part of their product strategy.
For firms that have not yet entered the market, however, the opportunity looks different. Rather than competing head-on with established ETF franchises, boutique and specialist managers have an opportunity to bring differentiated investment capabilities into an ETF structure. The infrastructure supporting ETF launches has also matured significantly. Turnkey providers, white-label platforms, administrators, custodians, distributors, authorized participants and market makers now offer routes to market that were not available during the first wave of ETF adoption.
At the same time, innovation within the ETF market continues to accelerate. Cerulli research found that 953 of the 1,132 ETFs launched in 2025 were actively managed, while firms such as BlackRock, Invesco, J.P. Morgan AM, and Fidelity continue to expand active ETF ranges across thematic and specialist strategies. This is no longer a market defined solely by passive beta products. ETFs are increasingly being used to deliver active, thematic and outcome-oriented investment strategies.
That matters because the next phase of ETF evolution may already be starting to emerge.
That evolution is now reaching asset classes once considered incompatible with a daily-traded, transparent wrapper. Providers are increasingly exploring how private markets and alternative strategies—private credit, private equity exposure and other semi-liquid structures—can be delivered inside an ETF, typically by blending a sleeve of less-liquid holdings with more liquid instruments to meet the creation/redemption and valuation demands of the structure.
These products remain early-stage and raise genuine questions around liquidity, valuation and disclosure, but they reinforce the same point: the wrapper is being asked to carry more, and the managers who understand its mechanics today will be best placed to shape what it holds next.
State Street and Apollo have already brought private credit into an ETF, while other managers are exploring how private equity and semi-liquid strategies might follow.
The difficulty will not be the underlying assets. Managers who run alternatives already understand credit and private markets well. The challenge lays in delivering those exposures within a structure built for daily liquidity, transparent pricing and continuous trading. Reconciling less-liquid holdings with the demands of the wrapper is the real engineering challenge, and the firms entering the space today are still working through it.
That is precisely why ETF fluency matters. Bringing a differentiated private or alternative strategy to market depends less on the strategy itself and more on mastering the mechanics around it – the capital markets relationships, basket and liquidity management, valuation discipline and oversight that make the structure work. Managers who already understand those mechanics can extend them to new asset classes. Those who do not will be learning the wrapper and the asset class at the same time.
Tokenized ETFs are not a mainstream product today. They are, however, increasingly visible on the horizon. Early tokenized versions of established funds are already trading on-chain, and market infrastructure providers have begun tokenizing major ETFs in regulated pilots. BlackRock has reportedly explored putting ETFs on-chain, with coverage noting that the firm is weighing ways to make exchange traded funds available as tokens on blockchain infrastructure. Nasdaq has also filed with the SEC to allow tokenized versions of equity securities and exchange traded products to trade on its markets, and later announced work on an equity token design intended to preserve existing regulatory frameworks and shareholder rights.
That does not mean tokenized ETFs will arrive en-masse overnight. There are still regulatory, operational, custody and market-structure questions to resolve. But the direction of travel is important for asset managers.
If tokenized ETFs become a meaningful part of the market, firms with existing ETF capabilities will be better positioned to adopt them. Tokenization may change how processes are delivered or settled, but managers will still need to understand authorized participant and market-maker relationships, intraday trading dynamics, creation and redemption processes, basket management, transparency requirements and ETF-specific oversight. Tokenization may eventually change how those processes are delivered or settled, but it does not remove the need to understand them.
For firms that remain outside the ETF marketplace, the risk is arriving at the next phase of market evolution without the capabilities needed to participate.
According to Morningstar, a record 146 U.S. listed Active ETFs were merged or liquidated in 2025. With record numbers of ETFs shuttering, the ETF market is often described as crowded, but that misses the real issue. Investor demand for ETFs remains strong and assets continue to grow.
The challenge is not convincing investors to use ETFs. The challenge is convincing them to use your ETF. That requires much more than regulatory approval, operational readiness and a portfolio strategy.
| An ETF is a distribution business as much as it is an investment product. Without visibility, liquidity, distribution support and a clear route to assets, even a well-designed strategy can struggle to gain traction. |
This is where many managers underestimate the shift. The capabilities required to launch an ETF are not the same as those required to launch a mutual fund. Unlike a mutual fund, an ETF requires a creation/redemption process built around Authorized Participants (APs) and in-kind baskets, plus a capital markets function to manage APs and monitor spreads and premium/discount. It also needs exchange listing, market maker support, and settlement through the relevant central securities depository—DTC in the US, or ICSDs like Euroclear and Clearstream—rather than transfer-agent recordkeeping, along with daily portfolio transparency the mutual fund model never demands.
In many cases, firms focus heavily on getting the ETF launched and far less on what happens afterwards. Yet launch day is just the starting point. An ETF that fails to attract assets, establish secondary market liquidity or build investor awareness can quickly become uneconomic regardless of the underlying strategy.
The more important question is not Can we launch an ETF? but Can we build an ETF business?
Before launching, firms should be asking:
Managers have several routes into the ETF market. The right answer depends on ambition, timing, scale, existing infrastructure and the level of control the firm wants to retain.
For firms looking to move quickly, a turnkey or white-label provider can provide an established series trust, board, distributor relationships and operational infrastructure. This can reduce the burden of launch and help firms test demand without building a full proprietary model from day one.
This approach should not be thought of as a shortcut around strategy, rather an accelerator. White-label ETFs still require commitment; sales focus and a clear plan for growth. They can work where speed-to-market matters and the product meets genuine client demand. Many managers have used this as a low-commitment way to test the ETF market, a 'launch-fast, fail-fast' approach that ties up less upfront capital. Even so, they should be careful not to cannibalize their existing mutual fund line-ups. Investors, too, are increasingly savvy to products that exist only to test the market, with no long-term plan behind them.
Some firms may be able to use existing custodians, administrators or service providers that already support their existing mutual fund businesses but also have robust ETF capabilities. This can help preserve parts of the current operating model while adding ETF-specific services such as order taking, AP connectivity, fund accounting and basket processing.
This route can be attractive where a manager already has other robust fund businesses and strong service provider relationships. ETF servicing is not the same as mutual fund servicing however most of the major service providers have an established formula for operating them side-by-side.
Larger managers, or firms with long-term ETF ambitions, may decide to build a more dedicated model. This may involve new technology, new service-provider selection, new governance, legal and compliance frameworks, exchange engagement, capital markets desk – AP and market-maker relationships, revised operating procedures and specialized internal resources.
This gives firms more control, but it also requires significantly greater investment and expertise. It is unlikely to be the right starting point for every manager.
Launching an ETF is not a single project sitting with product or distribution. It touches the operating model across investment teams, operations, data, fund accounting, legal, compliance, technology, vendor management, sales and governance.
Firms need to understand where their existing model can stretch and where it needs to change. That means assessing:
The aim is not just to get an ETF listed, but to build a model that can support the product once it is live, respond to investor demand and evolve as the market changes.
This is where a fail-fast mindset can be valuable. Firms should identify operational and product gaps early, validate demand before over-investing, organically develop subject matter expertise, and avoid building operating models around assumptions that have not been tested. Seed capital, target AUM and commercial viability need to be understood from the outset, not after the product has launched.
The next phase of product evolution will not wait for every manager to catch up.
For now, ETFs are the immediate opportunity. They give firms a way to meet investor demand, extend distribution, modernize product strategy and compete in a market where the wrapper increasingly matters.
But the longer-term issue is broader. If tokenized ETFs become part of the market's next stage—and private and alternative strategies continue their move into the wrapper—firms without ETF capability will be starting from further back. They will need to learn ETF mechanics at the same time as the industry is moving into more complex digital structures. That is a difficult place to compete from.