# At The Money: The Flood of New ETFs

An episode of [Masters in Business](https://invisiblenetwork.ai/podcast/730188152), 1 Oct 2025, 15 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/4e4cd910-40a1-4619-a5f3-ae2b0012ffff/6422e53c-e54b-48c7-8f0c-b369010b0add/audio.mp3?utm_source=Podcast&in_playlist=5873a3cb-298f-40bc-b71f-ae2b0013000d

There will be nearly 1,000 new ETFs issued in 2025. Most of these are NOT the usual low-cost passive indices we think of. Instead, these tend to be complex, expensive, active funds in an ETF wrapper. Leveraged directional bets, options, or derivatives-based, and a whole raft of complex strategies. Dave Nadig is President and Director of Research at ETF.com, and he shares with us how investors should navigate all of these new products. Each week, “At the Money” discusses an important topic in money management. From portfolio construction to taxes and cutting down on fees, join Barry Ritholtz to learn the best ways to put your money to work. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
[0:22] Speaker 2: There were six hundred new ETFs launched in the first
[0:26] Speaker 2: eight months of twenty twenty five, and it's gonna get
[0:30] Speaker 2: worse because so many more ETFs are coming out next year.
[0:35] Speaker 2: The growth has been explosive. What does this mean for investors?
[0:40] Speaker 2: I have the perfect person to discuss this with. Dave
[0:43] Speaker 2: Kndig is President and head of research at ETF dot Com.
[0:48] Speaker 2: He has been tracking the ETF industry pretty much since
[0:53] Speaker 2: its beginning and is well known as an expert in
[0:58] Speaker 2: the space. Dave, let's talk a little bit about what's
[1:02] Speaker 2: been going on. Most ETF assets are and will likely
[1:07] Speaker 2: continue to be cheap index based products. That's the legacy
[1:13] Speaker 2: for investors, low cost beta. Is this the future of
[1:17] Speaker 2: ETFs or are we going in a different direction.
[1:21] Speaker 3: I think most of the money is going to continue
[1:23] Speaker 3: to flow into low cost asset allocation targets right the
[1:28] Speaker 3: S and P five hundred broad bonds, broad commodities at
[1:32] Speaker 3: very very cheap institutional prices. It's just hard to beat that.
[1:36] Speaker 3: It's one of the best deals going in asset management
[1:39] Speaker 3: in the investing world. And so whether you're an individual,
[1:43] Speaker 3: mom and pop investor, just trading your own account or
[1:46] Speaker 3: whether you're the Harvard Endowment, anything in between. Cheap beta
[1:50] Speaker 3: is still probably going to be important to your portfolio,
[1:53] Speaker 3: and ETFs are going to remain the best wrapper for
[1:56] Speaker 3: that experience. However, this industry is not going to take
[2:01] Speaker 3: that lying down and desperately wants to make money. So
[2:04] Speaker 3: most of the new products, the new launches you talked about,
[2:07] Speaker 3: the six hundred will probably have eight hundred and nine
[2:09] Speaker 3: hundred by the end of the year. Almost all of
[2:11] Speaker 3: those products are very expensive. Doesn't mean some of them
[2:14] Speaker 3: aren't good, but they're all very expensive.
[2:16] Speaker 2: So let's talk about that new products are coming out
[2:20] Speaker 2: with what you described as quote insanely high fees, that
[2:24] Speaker 2: the big revenue winners are likely not the firms you
[2:27] Speaker 2: think of when someone says ETF at a cocktail party.
[2:32] Speaker 2: What does this mean for investors? What does this mean
[2:34] Speaker 2: for the industry? Are there really massive profits to be
[2:38] Speaker 2: had here?
[2:39] Speaker 3: There are pretty huge profits to be had here. And
[2:42] Speaker 3: if you look at where I like to look at
[2:44] Speaker 3: revenue based on flow, meaning like last month x amount
[2:48] Speaker 3: of money came in, what was the revenue implied by
[2:52] Speaker 3: that money and the implied revenue of the industry now
[2:56] Speaker 3: has probably about it. Twenty five percent of the imply
[3:00] Speaker 3: revenue from flow is going to products that cost over
[3:02] Speaker 3: one percent really, so that means there are a lot
[3:05] Speaker 3: of investors buying products that cost over one percent. And
[3:09] Speaker 3: the reason that's an issue for investors is not that
[3:12] Speaker 3: nothing is worth that fee, but that what's getting launched
[3:16] Speaker 3: tends to be very speculative. We're not talking about core
[3:20] Speaker 3: investing building blocks. We're talking about ETFs that use leverage
[3:24] Speaker 3: or ETFs that use the derivatives markets to shape your
[3:28] Speaker 3: pattern of returns to get you more income than you
[3:30] Speaker 3: might otherwise be able to selling volatility. Those types of
[3:34] Speaker 3: products are expensive, and while they may be useful, like
[3:38] Speaker 3: like a really sharp knife in the drawer can be
[3:41] Speaker 3: really useful when you got that chicken bone you got
[3:43] Speaker 3: to get through, it's not a one size fits all thing.
[3:46] Speaker 3: So I have some concern that individual investors see the
[3:50] Speaker 3: marketing from the industry which is really exclusively focused on
[3:53] Speaker 3: those expensive products, and gets sort of suckered into them.
[3:57] Speaker 2: So let's talk about what is transformative, What is innovative
[4:02] Speaker 2: in ETFs over the past few years. What trends do
[4:06] Speaker 2: you see shaping twenty twenty six and beyond. What is
[4:09] Speaker 2: the biggest new type of ETF that's coming out.
[4:15] Speaker 3: Well, you know, there's really three buckets of hot development
[4:20] Speaker 3: from a what could you as an investor target crypto?
[4:24] Speaker 3: We have to talk about, right, Not only do we
[4:26] Speaker 3: now have hundreds of billions of dollars tracking crypto in
[4:30] Speaker 3: various capacities, whether it's spot bitcoin, which is where most
[4:33] Speaker 3: of those flows have gone, but now we're talking about
[4:36] Speaker 3: Ethereum and Solana. We're talking about stake diversions where you're
[4:39] Speaker 3: taking your Solana and you're putting it into a contract
[4:43] Speaker 3: to earn fees off of or earn interest off of it.
[4:46] Speaker 3: That ecosystem of crypto products is going to get very
[4:50] Speaker 3: complex very quickly. The SEC has put out sort of
[4:54] Speaker 3: accelerated listening standards or a default listening standards, which will
[4:57] Speaker 3: allow probably the next ten to twenty coins on the
[5:01] Speaker 3: market cap list to be launched as Spot ETFs. So
[5:04] Speaker 3: those will all be launched within the next six to
[5:07] Speaker 3: twelve months. Before you it's going to be a free
[5:09] Speaker 3: for all. Before you move.
[5:10] Speaker 2: Off crypto, I have to ask about black Rocks I Bit.
[5:16] Speaker 2: You know it was five billion at launch. It's something
[5:19] Speaker 2: like eighty two billion already. Is this the fastest ever
[5:24] Speaker 2: acid accumulator of any ETF that's been launched.
[5:28] Speaker 3: It's pretty close. If it's not the winner, I certainly
[5:31] Speaker 3: think on a pure dollar basis, I can't think of
[5:35] Speaker 3: anything that has had that kind of ramp. GLD when
[5:37] Speaker 3: it first came out, you know, was one of the
[5:39] Speaker 3: first to a billion, and then the first to five billion,
[5:41] Speaker 3: and that broke a lot of records. I think I
[5:44] Speaker 3: Bit and bitcoin as a class has really kind of
[5:47] Speaker 3: blown all those things out of the water, and it's
[5:49] Speaker 3: been it's been I think beneficial for the most part. Right,
[5:53] Speaker 3: it's been an orderly process. I think having these bitcoin
[5:56] Speaker 3: ETFs has helped investors understand it. I'm hearing from a
[6:01] Speaker 3: bigger institution's bigger advisors they love the ETF because it
[6:05] Speaker 3: solves all of their custody issues. Everything stays in the
[6:08] Speaker 3: same account. They don't have to worry about having on
[6:11] Speaker 3: chain assets. So while cryptopurists may not be into it,
[6:15] Speaker 3: I think the average investor is way better suited to
[6:18] Speaker 3: get their little bit of crypto exposure in that ETF.
[6:21] Speaker 2: Rapper, and you mentioned what the SEC is permitting, not
[6:25] Speaker 2: just in crypto, but across the boards. I read your
[6:29] Speaker 2: regular writings and one of the things you had said
[6:32] Speaker 2: is we have a quote incredibly permissive launch environment unquote.
[6:38] Speaker 2: What does this mean in terms of the sort of
[6:41] Speaker 2: things we can see in ETFs either with leverage two
[6:46] Speaker 2: x three x in verse two x. What does this
[6:49] Speaker 2: permissive environment mean for what ETFs are going to get launched?
[6:54] Speaker 3: It means we're gonna get a lot of them. You know,
[6:55] Speaker 3: we're gonna launch all the things.
[6:57] Speaker 2: As I like to say, the thing.
[6:59] Speaker 3: The biggest thing we've had is this move towards single
[7:02] Speaker 3: stock ETFs. And for people might be confused by that,
[7:05] Speaker 3: it's not that you're buying an Apple ETF to invest
[7:07] Speaker 3: in just Apple, because you can obviously just buy Apple
[7:10] Speaker 3: to do that. You're buying an Apple ETF that maybe
[7:13] Speaker 3: gives you two x Apple exposure or minus two x
[7:16] Speaker 3: Apple exposure, so when it goes it goes down, you
[7:19] Speaker 3: go up. Or you're writing options on your Apple position
[7:23] Speaker 3: so that you can get some extra income, or you're
[7:26] Speaker 3: doing a combination of both so that you can only
[7:28] Speaker 3: get you know, you get two x the upside and
[7:31] Speaker 3: minus one x the downside, but with caps involved. Because
[7:34] Speaker 3: you're selling a lot of options along the way. Any way,
[7:37] Speaker 3: you can imagine mixing and matching these kinds of patterns
[7:41] Speaker 3: of returns. The combination of leverage, income and protection around
[7:45] Speaker 3: a single stock is going to be launched. If you
[7:48] Speaker 3: think about it. We've got five hundred stocks and the
[7:50] Speaker 3: S and P five hundred. They are about six different
[7:52] Speaker 3: flavors you can think of for each individual stock, that's
[7:56] Speaker 3: a couple thousand ETFs we're going to have to keep
[7:58] Speaker 3: track of, assuming there's only one of each flavor. And
[8:02] Speaker 3: this industry loves to compete against each other, so legitimately,
[8:05] Speaker 3: I think by this time next year we could have
[8:08] Speaker 3: several thousand more ETFs than we do right now.
[8:11] Speaker 2: More ETFs than there are actually stocks.
[8:14] Speaker 3: Huge already, they're absolutely I mean we've been under we
[8:17] Speaker 3: haven't had five thousand stocks in the whelshare in a
[8:19] Speaker 3: long time. I think you're or so. Yeah. So we're
[8:23] Speaker 3: going to see all those single stock products, which are
[8:25] Speaker 3: for the most part, training vehicles. If you're a day trader,
[8:29] Speaker 3: there's lots of value in there. If you are trying
[8:31] Speaker 3: to you know, monetize a long term position, there's some
[8:34] Speaker 3: value in those kinds of covered call strategies. They're all
[8:37] Speaker 3: very expensive, they're very inappropriate for most long term investor
[8:42] Speaker 3: from an allocation perspective, but sharp useful training tools for
[8:46] Speaker 3: a certain class of trader.
[8:48] Speaker 2: I keep reading some of the things you're penning about
[8:52] Speaker 2: share class relief. Explain what this means and why this
[8:56] Speaker 2: is another flood of new ETFs that are coming out.
[8:59] Speaker 3: Yeah, let's an example. A DFA dimensional was late to
[9:02] Speaker 3: the ETF party, very well known sort of the nineties
[9:05] Speaker 3: for being one of those shops where you could only
[9:08] Speaker 3: buy them through an advisor who'd gone through their coursework.
[9:11] Speaker 3: They made the shift to convert some of their mutual
[9:14] Speaker 3: funds to ETFs a couple of years ago, and we're
[9:17] Speaker 3: very successful at it now. Why didn't they convert all
[9:20] Speaker 3: of them? Well, because a lot of the DFA products
[9:23] Speaker 3: end up in four oh one K plans, and if
[9:25] Speaker 3: you're in a four to oh one K plan, that
[9:27] Speaker 3: means you need to be able to get fractional shares,
[9:29] Speaker 3: which is really easn't a mutual fund and impossible in
[9:31] Speaker 3: an ETF. So the only way to get the efficiencies
[9:35] Speaker 3: of the ETF structure into those mutual funds is a
[9:39] Speaker 3: share class. An ETF share class pointing at the same
[9:42] Speaker 3: pool of assets. That's how a lot of Vanguard ETFs
[9:45] Speaker 3: are built. They had a patent which has now expired.
[9:48] Speaker 3: The SEC has seventy odd applications from other players in
[9:52] Speaker 3: the industry to basically duplicate things the way Vanguard is.
[9:57] Speaker 3: They've made it very clear that's imminent. I would suggest
[9:59] Speaker 3: by the end of the year, at the very latest,
[10:01] Speaker 3: we'll see this first one's approved, and that will then
[10:04] Speaker 3: be a flood because that becomes a very very simple
[10:07] Speaker 3: boilerplate piece of paperwork to file a new share class
[10:11] Speaker 3: and get it trading on NAZI or Nasdaq, Orcibo. So
[10:14] Speaker 3: we'll just see a lot of those. I would suspect
[10:16] Speaker 3: by the end of the year, we could have maybe
[10:18] Speaker 3: a thousand of those individual share class ETFs turned on.
[10:22] Speaker 3: If all of the people who have filed, converted all
[10:26] Speaker 3: or share classed all of the things they could, it
[10:28] Speaker 3: would be about five or six thousand new ETFs.
[10:31] Speaker 2: Huh, that's really intriguing. I have to ask a question,
[10:36] Speaker 2: and you're the one who's really schooled me on this.
[10:39] Speaker 2: If mutual funds were created today, they probably wouldn't be approved.
[10:44] Speaker 2: Explain the problem with mutual funds and why ETFs are
[10:48] Speaker 2: arguably so much superior.
[10:51] Speaker 3: Well, the biggest problem with funds is their tax fairness.
[10:55] Speaker 3: It's the issue with a fund is that if you
[10:58] Speaker 3: as a big investor, Let's say you owned twenty percent
[11:00] Speaker 3: of the Dave mutual fund and you decide I'm terrible
[11:03] Speaker 3: and you on out, well, the mutual fund me has
[11:06] Speaker 3: to now go sell a bunch of securities to give
[11:09] Speaker 3: you back your twenty percent of my fund. All that
[11:11] Speaker 3: cash that you're gonna want that engenders generally a bunch
[11:14] Speaker 3: of capital gains. Those capital gains now have to be
[11:17] Speaker 3: distributed to all the people who are left, the people
[11:19] Speaker 3: you abandoned, Barry. They end up paying taxes because you left,
[11:23] Speaker 3: because you created a capital gain for everybody. Now, it's
[11:27] Speaker 3: not that those are taxes that would never be paid,
[11:29] Speaker 3: it's just you're paying them earlier than you would otherwise
[11:32] Speaker 3: because you get to reduce your basis. So, individual investors
[11:35] Speaker 3: in a mutual fund can often get tax distributions through
[11:38] Speaker 3: no fault of their own, through no action of their own,
[11:41] Speaker 3: simply because other investors go in and out, and an
[11:44] Speaker 3: ETF that simply doesn't happen. So it is a simply
[11:47] Speaker 3: a fairer mechanism. The ETF also brings other things that
[11:52] Speaker 3: are helpful, like the ability to wash out some cap
[11:54] Speaker 3: gains by doing so called creation redemption heartbeat trading. That's
[11:59] Speaker 3: a little feature of ETFs that makes them very tax efficient,
[12:02] Speaker 3: and of course liquidity and transparency and all those other things.
[12:06] Speaker 3: But the big reason mutual funds would probably get the
[12:08] Speaker 3: kibosh today is they're inherently less fair in terms of
[12:12] Speaker 3: how they treat individual investors.
[12:13] Speaker 2: So even if I don't sell my mutual fund but
[12:16] Speaker 2: other people have, I incre capital gains one hundred percent.
[12:21] Speaker 3: Now you get again, you get to change your basis,
[12:23] Speaker 3: so when you go to sell, you'll pay less tax gains.
[12:26] Speaker 3: But I don't know about you. I prefer paying taxes later,
[12:30] Speaker 3: hopefully never, or maybe after I'm dead, not today.
[12:34] Speaker 2: So so final question, it sounds like the future of
[12:38] Speaker 2: ETFs are pretty much anything anything you want to do,
[12:43] Speaker 2: sometimes cheap, always very liquid, but can be accomplished very
[12:49] Speaker 2: well with an ETF. Is this the future of asset management?
[12:54] Speaker 3: I think so. I think the ETF structure is the
[12:56] Speaker 3: most efficient vehicle we've come up with for taking exposures
[13:01] Speaker 3: and getting them traded on exchanges, and it's hard for
[13:05] Speaker 3: me to see how we're going to make it any
[13:06] Speaker 3: more efficient. Tokenization Crypto sometime down the line will replace
[13:12] Speaker 3: some of what we've done with ETFs, but will largely
[13:14] Speaker 3: duplicate it, and it will just do it in a
[13:16] Speaker 3: different fashion. So the ETF structure is where you're going
[13:20] Speaker 3: to probably get almost all of your exposures for the
[13:24] Speaker 3: foreseeable future, with some very strange educases things like some
[13:28] Speaker 3: private credit or maybe some real estate that you can't
[13:32] Speaker 3: trade daily. There'll be some EDU cases. Everything else is
[13:35] Speaker 3: going to be an ETF.
[13:36] Speaker 2: So to wrap up, if we're talking about the future
[13:40] Speaker 2: of ETFs, we're really talking about the future of asset
[13:44] Speaker 2: allocation and investing. For the most part, the big money
[13:49] Speaker 2: are in the low cost passive indexes that charge three
[13:53] Speaker 2: four five basis points. But the fastest growing space in
[13:58] Speaker 2: ETF world are active funds. Are alternative funds are all
[14:02] Speaker 2: sorts of niche areas, some of which are pretty pricey.
[14:07] Speaker 2: One hundred, one hundred and twenty five basis points, directional bets,
[14:11] Speaker 2: leverage two x three x, inverse bets. Those are really
[14:15] Speaker 2: special use cases. Tread carefully if you're playing in those spaces.
[14:20] Speaker 2: Use ETFs for what they're really good at, getting you
[14:24] Speaker 2: low cost exposure to inexpensive indices. Tread lightly when you
[14:30] Speaker 2: go into the pricier, wilder stuff. Those are potential accidents
[14:35] Speaker 2: waiting to happen. I'm Barry Ridlts. You're listening to Bloomberg's
[14:39] Speaker 2: at the Money

Shows are listed from Apple Podcasts' charts and directory, and Podcast Index where it is used. Every show and episode belongs to its publisher and plays from the publisher's own feed; this site hosts none of them.