ETF Trends & Outlook for 2025

This post is a summary of a recent webinar featuring speakers from Clear Street, Nasdaq, GraniteShares, and Tuttle Capital Management. To view an on-demand recording of the webinar, please click here.

The Exchange-Traded Fund (ETF) industry is poised for significant growth in 2025 and beyond, driven by innovative new products, an evolving regulatory landscape and expanded access to diverse asset classes.

At a recent World Federation of Exchanges (WFE) webinar, industry leaders gathered to explore the evolving landscape of ETFs. Among the key speakers were Tom Bonville, Managing Director & Head of Derivative Sales at Clear Street; Alison Hennessy, Head of ETP Listings at Nasdaq; William Rhind, Founder & CEO of GraniteShares; and Matthew Tuttle, CEO & CIO of Tuttle Capital Management. Together, they explored the latest trends and future opportunities shaping the ETF market.

The numbers tell a compelling story: over a trillion dollars flowed into approximately 4,000 US-listed ETFs in 2024 alone. "The term 'record-breaking' has become synonymous with ETF growth year over year for the past five years or so," noted Nasdaq's Alison Hennessy. Yet with mutual funds still commanding $35 trillion compared to ETFs at $10 trillion, the runway for growth remains substantial.

Perhaps the most significant development has been access to cryptocurrency. The approval of spot Bitcoin ETFs in January 2024 marked a pivotal moment, leading to 20 ETFs now providing cryptocurrency exposure. This evolution reflects a broader trend in the industry – making sophisticated investments accessible to everyday investors. As Clear Street's Tom Bonville observed, "Whatever an investor is looking for is either in the works or potentially already there."

The surge in single-stock leveraged and inverse ETFs exemplifies this democratization of asset classes. For example, GraniteShares' 2X NVIDIA ETF (NVDL) attracted over a billion dollars in inflows in a single day in 2024, highlighting the massive appetite for these innovative products.

Active ETFs have also gained significant traction, with approximately 500 new launches in 2024 accounting for 30% of flows. These products span traditional stock-picking strategies, covered call approaches and leveraged products.

However, with rapid growth comes operational complexity. Clear Street plays a crucial role in this ecosystem by bridging the gap between ETF issuers and market infrastructure. "We're engaging the ETF ecosystem through interfacing with custodian banks and providing either leverage/inverse exposure via swaps or option exposure," explained Bonville. This infrastructure support becomes increasingly critical as the industry continues to evolve and expand.

The political landscape is adding another layer of dynamism to the market. The new administration's pro-crypto stance and potential regulatory reforms could significantly influence the ETF space. Industry participants anticipate possible rollbacks of regulations implemented over the past four years, potentially reducing the burden on asset managers and facilitating further innovation.

Looking globally, while the US maintains its position as the dominant market, Asia is emerging as a powerful force in the ETF space. William Rhind of GraniteShares predicts that Asian ETF assets will surpass European assets within five years, driven by favorable demographics and strong economic growth. This shift is already influencing US exchanges, which are enhancing their international trading capabilities to meet growing global demand for US-listed ETFs.

As we look ahead, several exciting developments are on the horizon. The industry is exploring integration of private assets, though regulatory constraints currently limit progress in this area. Multi-share class structures enabling ETF share classes of mutual funds are gaining traction, and innovation in income-focused strategies continues to evolve. The emergence of AI-driven investment approaches promises to add another dimension to ETF innovation.

"The next four years is certainly going to be a wild ride," says Bonville. At Clear Street, we're powering this ETF revolution with solutions built for today's—and tomorrow’s—market. Our cloud-native infrastructure handles everything from swap facilitation for leveraged products to seamless tri-party arrangements with custodian banks. For investors looking to capitalize on ETF growth, we offer:

• Prime brokerage services tailored for ETF trading
• Swap dealing capabilities for leveraged and inverse exposure
• Advanced options trading infrastructure for options-based ETF strategies
• Robust clearing solutions that scale with volume

Plus, being cloud-native means we can adapt quickly as the market evolves. Whether you're trading the latest crypto ETF or exploring options-based strategies, we've got the tech and expertise to support your goals. After all, innovation only works if you've got the right foundation on which to build.

For more information, please visit https://www.clearstreet.io/.

To watch the full webinar, please visit: https://www.world-exchanges.org/etf-trends-future-outlooks