New research confirms the active ETF wave is accelerating — but not every product will survive the shakeout.
The exchange-traded fund industry has entered an era defined less by explosive growth and more by disciplined selection.
According to a new report from Cerulli, active ETFs are driving product development at a pace that would have seemed implausible just a few years ago, yet the rapid build-out is increasingly separating winners from products destined for a short life.
Cerulli’s latest product research report found the total number of ETF strategies in the US climbed from approximately 2,692 in 2021 to nearly 5,000 by year-end 2025 – a doubling of the marketplace in just four years.
More than 1,100 new ETFs were launched in 2025 alone, marking the third consecutive year of record launches. By contrast, just 208 ETFs were closed in 2025, broadly consistent with the 212 closures recorded in 2023.
“The overall ETF ecosystem remains strong, with product development backed by tremendous flows to the structure and uptake across categories,” said Kevin Lyons, senior analyst at Cerulli Associates. “At the same time, the rapid buildout of a range of in-demand solutions creates the risk of a closure wave.”
Active strategies take the lead
The defining story inside the broader ETF surge is the dominance of active strategies. Of the 1,132 ETFs launched last year, 953 were actively managed, exceeding the combined total of all ETF launches in 2021.
The momentum shows little sign of slowing. Cerulli found that 83% of ETF issuers plan to launch at least one active ETF in 2026, and 94% are either currently developing or intend to develop transparent active ETF solutions this year.
Morningstar’s Manager Research team reached similar conclusions in a February analysis of active ETF launches and closures. Compared to the nearly 1,000 active ETF launches in 2025, they said just 95 mutual fund launches and 150 passive ETF launched that year. In all, those active ETFs captured roughly $475 billion in inflows, accounting for one-third of all net new money flowing into ETFs for 2025.
Among the top performers by flows, Morningstar said BlackRock’s iShares U.S. Equity Factor Rotation Active ETF drew more than $13 billion in 2025, in part because the product is embedded in several of the firm’s model portfolios made available to advisors.
Six J.P. Morgan Asset Management ETFs also ranked among the top 25 active ETF products by flows, including JPMorgan Equity Premium Income ETF and JPMorgan Nasdaq Equity Premium Income ETF.
Closures clustered among subscale products
Both Cerulli and Morningstar found a growing incidence of products failing to achieve the critical mass of assets needed to become economically viable.
By Cerulli’s monitoring, more than 85% of all ETF closures since 2021 have involved products with assets under management below $50 million – a baseline threshold of advisor and investor interest below which managers generally saw no realistic path to growth.
In 2025, that figure reached 92% of all closures. Defined outcome, leveraged, and option income ETFs collectively accounted for nearly one-third of all subscale products in the ETF universe at the end of 2025.
Morningstar’s analysis noted that about 150 active ETFs were shuttered in 2025 – a record for a single year – even as nearly 1,000 new products were launched overall. Most of those closed funds had less than $25 million in assets.
Morningstar found most active ETFs were also short-lived, with an average lifespan of roughly 1.75 years by the time they were merged or terminated in 2025. That’s down from four to five years between 2021 and 2024, suggesting asset managers are moving quicker to pull the plug on products that fail to gain traction.
Q1 2026 sets the pace for continued growth
ISS Market Intelligence reported 220 active ETF launches in Q1 2026, slightly ahead of Q1 2025’s pace, and characterized issuance as having “settled into a structurally elevated range.”
The research firm said “active ETFs continued to anchor launch activity,” framing the continued pace of new products as evidence that the wrapper has been fully integrated into core product strategy at major managers.
“This is not a market pulling back, but one actively testing ideas and moving quickly to determine which products merit staying power,” wrote Alan Hess, vice president of U.S. fund research, senior associate Antara Maity in an April note.
Cerulli found 87% of ETF issuers plan to launch at least one transparent active ETF this year, with 39% targeting at least six launches. Shelf inventory management is still a priority, however: 94% said they plan to close up to two transparent active ETFs in 2026, and all survey respondents said they 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,” Lyons said.
“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,” the analysts at ISS Market Intelligence said.