The exchange-traded fund market in the United States has reached a new inflection point, where the sheer volume of product launches is increasingly overshadowed by the question of which funds will survive. According to a report from Cerulli Associates, the total number of ETF strategies doubled from roughly 2,692 in 2021 to nearly 5,000 by the end of 2025, driven overwhelmingly by active management.
In 2025 alone, 1,132 new ETFs came to market, marking the third consecutive year of record issuance. Of those, 953 were actively managed, a figure that exceeds the combined total of all ETF launches in 2021. The trend shows no signs of abating: Cerulli found that 83% of ETF issuers plan to launch at least one active ETF in 2026, and 94% are developing or intend to develop transparent active ETF solutions this year.
Morningstar's Manager Research team corroborated these findings in a February analysis. They reported that active ETFs captured roughly $475 billion in inflows in 2025, representing one-third of all net new money flowing into ETFs. By contrast, only 95 mutual funds and 150 passive ETFs were launched during the same period. Among the top performers, BlackRock's iShares U.S. Equity Factor Rotation Active ETF drew more than $13 billion, partly due to its inclusion in the firm's model portfolios for advisors. Six J.P. Morgan Asset Management ETFs also ranked among the top 25 active products by flows, including the JPMorgan Equity Premium Income ETF and JPMorgan Nasdaq Equity Premium Income ETF.
Despite the launch frenzy, the closure rate remains relatively low. Only 208 ETFs were closed in 2025, compared to 212 in 2023. However, both Cerulli and Morningstar noted a growing concentration of closures among subscale products. Cerulli reported that more than 85% of all ETF closures since 2021 involved funds with assets under management below $50 million. In 2025, that figure rose to 92%. Defined outcome, leveraged, and option income ETFs collectively accounted for nearly one-third of all subscale products at year-end 2025.
Morningstar's data showed that about 150 active ETFs were shuttered in 2025, a record for a single year, even as nearly 1,000 new products launched. Most of those closed funds had less than $25 million in assets. The average lifespan of an active ETF before closure or merger dropped to roughly 1.75 years in 2025, down from four to five years between 2021 and 2024, indicating that asset managers are quicker to pull the plug on underperformers.
Looking ahead, ISS Market Intelligence reported 220 active ETF launches in the first quarter of 2026, slightly ahead of the pace in Q1 2025. The research firm described issuance as having "settled into a structurally elevated range," with active ETFs continuing to anchor launch activity. Cerulli found that 87% of ETF issuers plan to launch at least one transparent active ETF this year, and 39% target at least six launches. Shelf inventory management remains a priority: 94% of issuers said they plan to close up to two transparent active ETFs in 2026, and all respondents expect to close no more than two passive cap-weighted products.
"Although closures could increase due to new product development, it is unlikely to hamper the broader ETF industry," said Kevin Lyons, senior analyst at Cerulli Associates. ISS Market Intelligence analysts added that for the remainder of 2026, "success will depend less on the number of launches and more on whether certain products prove resilient enough to earn staying power."
Advisors should note that the active ETF wave is reshaping product shelves, but the rapid buildout also raises the risk of a closure wave. For context, recent developments such as Capital Group's filing for two multi-asset income ETFs and Franklin Templeton's launch of a CLO ETF underscore the ongoing demand for active strategies. Meanwhile, Fidelity's introduction of ETF share classes for three mutual funds highlights the structural shift toward the ETF wrapper.
