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The Daily Economic News reporter was informed that recently, a data compiled by Morningstar showed that thanks to the rapid issue of new funds, the current number of ETFs in the U.S. market has exceeded 4,300, for the first time exceeding the number of individual shares, the latter is currently about 4,200.
According to the Institute of Investment Companies (ICI), the proportion of ETFs in the entire investment vehicle system has increased from 9% a decade ago to about 25% today.
However, some effects have also followed. As the ETF market has become increasingly saturated and complex, thousands of funds have adopted nearly identical investment strategies and have similar code names. Many of these funds failed to gain market attention and were eventually forced to liquidate.
Some industry insiders pointed out that it is a good thing to choose more books, but once it becomes a burden, the nature changes. "Too many choices can fall into a paradox. Instead of feeling that investors are in control of the overall situation, they will be at a loss."
The importance of record-breaking number of ETFs increased significantly in June
Recently, the US stock market has ushered in a historic moment.
According to data released by Morningstar, the number of ETFs in the U.S. market has exceeded 4300, while the number of listed companies is only about 4200. In other words, the number of ETFs listed on the US market exceeded the number of individual stocks for the first time, setting a new record.
Data from Bloomberg Intelligence also showed that in the first half of 2025, the number of new ETFs listed in the U.S. was 469, up 50% from the same period in 2024, about 140% higher than the average of the past five years.
According to ICI data, the proportion of ETFs in the entire investment vehicle system has climbed from 9% 10 years ago to about 25% today, and their importance has increased significantly.
The reporter of "Economic Daily News" noted that in July 2025, the asset size of listed ETFs in the United States increased by US$263.58 billion, and the total size reached US$11.76 trillion. In the past 12 months, the size of U.S. ETF assets has increased by US$2.27 trillion, a considerable increase of 23.9%.
This phenomenon has also attracted the attention of the veteran US financial magazine Barron's. In a recent report, Barron's called the development of ETFs in the United States a "Cambrian explosion" and pointed out that in 2024, more than 700 ETFs were launched by fund companies, and more than 4,000 ETFs are currently listed on the New York Stock Exchange (NYSE). Excluding money market funds, ETFs have recently accounted for one-third of the investment funds in long-term funds.
In addition, as an innovative product, ETFs are gradually replacing traditional investment varieties.
In recent years, with the continuous introduction of new ETFs, the number of joint funds, closed funds and unit investment trusts has continued to decrease, making the total number of investment varieties stable at about 16,000.
Among the newly issued ETFs, the vast majority employ active management strategies. In addition, the issuer has also launched money market ETFs, cryptocurrency ETFs and other categories, making today's ETFs cover almost all fields. However, in the face of a huge number of ETFs with all kinds of things, investors have fallen into "difficulty in choosing".
Too much choice leads to a paradox that makes it difficult for investors to adapt
It is well known that an ETF is a fund that tracks changes in the “standard index” and is traded on a stock exchange. The fund assets are a package of stock portfolios, the stock types in the portfolio are the same as the component shares contained in a particular index, and the proportion of the number of shares is consistent with the proportion of the component shares of that index.
Investors buy ETFs in order to buy a package of stocks at one time, which is not only convenient and fast, but also worry-free. The variety also reduces costs and tax rates for investors.
However, the current situation is that the number of listed ETFs in the United States has exceeded that of individual stocks. For investors, selecting ETFs has become a major project, and sifting through a large number of ETFs page by page can be a difficult task.
Douglas Boneparth, certified financial planner and founder and president of Bone Fide Wealth, said in an interview with the media that it is good to choose multiple books, but once there are enough to become a burden, the nature changes.
Bone Fide Wealth is based in New York and manages about $115 million in assets.
“Too many choices will fall into a paradox that investors will not only feel like they control the global situation, but will not adapt to it,” Douglas Bonaparte noted. In his view, the excessive number of ETFs has led to “the corresponding ETFs in any field today,” which also makes many people realize they need external help.
Data from third-party research firm Cerulli shows that the proportion of discretionary investors (i.e. investors who choose their own investment targets) has dropped from 41% in 2009 to 25% in 2024, and more and more investors are turning to external investment advisors.
"People start seeking professional advice because they don't even know where to start," says Scott Smith, a senior director at Cerulli.
The reporter of "Economic Daily News" noticed that some investors pointed out in interviews with the media that the pressure caused by this is great."Because there are so many ETFs, we have to rely heavily on checking market information every day to keep up with the pace. You can't relax for a day. What if a new fund launches and performs better?"
According to some industry insiders, the excessive number of ETFs means that the industry has “exaggerated” on certain topics, for example, there are currently 70 ETFs focused on Bitcoin, and about a third of them will not be issued until 2025.
In addition, this situation has also intensified the competition among fund issuers. In order to achieve differentiated competition and rationalize higher fee rates, various institutions have launched higher-risk fund products, such as single stock ETFs, leveraged ETFs and inverse ETFs. Insiders pointed out that ordinary investors may not fully understand the risks of such products.
Because of this, the ETF market has become increasingly saturated and complex-thousands of funds use nearly the same investment strategies and have quite similar code names, many of which failed to gain market attention and were eventually forced to liquidate.
However, Ben Johnson, head of customer solutions at Morningstar, also offered a different view. He said that although choice overload pervades every aspect of people's lives, from grocery store shelves to the proliferating ETF category, and industry innovation has further spawned a "product flood," in the long run, only funds with lasting appeal will survive.
“Like trying Crystal Pepsi (editor’s note: PepsiCo launched a transparent coke called ‘Crystal Pepsi’ in 1992) consumers may feel fresh, or even a little new, only once, but it eventually disappears from the store shelves,” he said.