--- title: More Than 1,000 New ETFs Launched This Year. Most Are High-Risk ‘Noise’ description: More ETFs are flooding the market, including niche and actively managed funds. Here’s what investors should know before buying. authors: - name: Jordan Chussler role: Editor, Investing and Banking url: https://money.com/author/jordan-chussler/ bio: Jordan is an investment editor and CPFC who specializes in traditional equities, gold and other precious metals, retirement savings and income investing. He combines his personal and professional interests in finance and education to help readers increase their financial literacy and make better investment choices. education: Lynn University certifications: Certified Personal Finance Counselor at_money_since: 2023 articles: 132 covers: - Investing - Banking - Credit - Credit Cards - Economy and Politics - Housing - Identity Theft - Insurance - Loans - Mortgages - Personal Finance - Professional Services - Retirement also_seen_in: - Weiss Ratings - 24/7 Wall Street - Better Investing - Yahoo Finance - Nasdaq - Investing.com - Marketbeat - MSN Money social: - https://www.linkedin.com/in/jordan-chussler-b3597811/ editors: - name: Katherine Peach role: Associate Editor url: https://money.com/author/katherine-peach/ bio: Katherine Peach is an associate editor with a focus on news and email at Money. She didn’t always intend to write about money. She’s a classically trained pianist who dreamed of becoming an archaeologist. However, in 2007 Katherine began working in financial publishing as an editor for Agora Inc. (Apparently, unearthing ideas about improving your personal finances isn’t such a bad career alternative!) Katherine’s writing and editing work has been featured in Investing Daily, Clever, Investor Junkie, The Palm Beach Letter, Truth & Plenty, Independence Monthly, NICHE, AmericanStyle, AntiqueWeek, Millennial Money, Money Done Right, TheStreet, Sure Dividend and many others. Katherine holds a Bachelor of Arts in Ancient Studies with concentrations in Archaeology and Ancient Languages and a minor in Literature from the University of Maryland, Baltimore County. She is a member of Phi Beta Kappa. education: University of Maryland, Baltimore County at_money_since: 2025 articles: 14 covers: - Investing - Banking - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Federal Reserve Rate Cuts - Health and Wellness - Housing - Identity Theft - Insurance - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes published: '2026-09-16T14:09:11.000Z' modified: '2026-09-16T15:14:42.000Z' section: Investing word_count: 1102 canonical: https://money.com/etf-boom-new-funds-investor-risks/ type: Article source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Balloon containing many stocks](https://img.money.com/2026/09/News-ETF-fever-outof-control.jpg) ## Key Takeaways - ETF inflows in 2026 are on pace to surpass 2025's record, averaging $5.7 billion daily. - Approximately 80% of new ETFs are actively managed, carrying higher expense ratios and often introducing complex and high-risk strategies. - Easy trading access and social media are encouraging riskier investing behavior, especially among younger investors. - Financial experts recommend ignoring the noise and focusing on long-term wealth creation through broad-based, low-cost, tax-efficient index funds. Following [record-setting years for inflows](https://money.com/why-etf-investing-popular-stocks/) in 2024 and 2025, exchange-traded funds (ETFs) are again on track for a banner year. The investment vehicle's popularity has pushed the number of U.S.-listed ETFs above the number of individual stocks. But as the market becomes flooded with new funds, investor demand may be incentivizing the proliferation of higher-cost, lower-quality ETFs. According to [ETF Trends](https://www.etftrends.com/equity-etf-content-hub/2025-was-record-year-for-etfs-2026-is-upstaging-it/), as of Aug. 5, ETFs were averaging $5.7 billion in net inflows per day in 2026. That's up roughly 40% from 2025's record average pace, and puts those funds on pace to surpass last year's total inflows well before the end of 2026. But as more niche funds hit the market — from ETFs that [invest in billionaires' companies](https://money.com/billionaires-club-etf-club-stocks/) to others focused on [AI infrastructure](https://money.com/thematic-etfs-invest-market-trends/) — some are becoming increasingly esoteric, introducing additional portfolio risks and serving as a warning to everyday investors. ## Shiny object syndrome grips the market As the S&P 500 continues to trade near its record high set on Aug. 13, bullish investor sentiment has coincided with an unprecedented boom in new ETF launches. Driven by record inflows, 1,023 new funds debuted between January and the end of August, according to financial data and market analytics firm [FactSet](https://insight.factset.com/u.s.-etf-monthly-summary-august-2026-results). That marks a 52% increase over the same period a year earlier. But that optimism may reflect a disconnect from reality, according to Danny Beckwith, a senior advisor at First Financial Consulting. "Highly diversified, low-cost, tax-efficient ETFs obviously still exist. But there are all sorts of \[funds\] out there with funky names and special purposes," he says. "I think they are nothing more than a ploy to get as much money under management as possible and charge people fees... I would categorize them as noise." A lot of that noise stems from a decisive shift toward active management. ETFs have historically offered passively managed exposure to indexes, sectors or thematic trends. However, the vast majority of new funds are actively managed and carry higher expense ratios — the fees associated with administering, marketing and managing the funds. At the midpoint of 2026, around 2,100 ETFs passively tracked an index**,** while [more than 3,200 were actively managed](https://www.morningstar.com/funds/whats-really-happening-with-active-etfs-which-ones-are-resonating-with-investors), according to investment research firm Morningstar. The companies issuing those ETFs are capitalizing on investors' fears and interests with enticing marketing, according to Beckwith. "It's just like social media these days," he says. "It genuinely plays into people's desires for the new hot thing." One example is the actively managed Meta AI Lab Ecosystem ETF, which debuted in August. It predominantly invests in Meta, along with companies linked to its AI ecosystem. But over the past year, Meta's stock has dropped more than 12%. The company recently settled a landmark lawsuit over teenage social media addiction, missed second-quarter earnings expectations by nearly 13% and has seen its AI spending surge without a quantifiable return on investment. That fund lost nearly 6% in the four days following its Aug. 14 launch and currently trades around 3% lower than its debut price more than a month later. Another fund, the Texas Precious Metals Trust Y'all Street Physical Gold ETF, is trying to reinvent the wheel. Listed in July [amid gold's bounce-back rally](https://money.com/gold-prices-comeback-2026/), it tracks the precious metal's price — something dozens of reputable funds already do. But its expense ratio of 0.24% is 0.01% cheaper than the 21-year-old iShares Gold Trust. On a $10,000 investment, that amounts to a mere $1 in annual savings. "If you have a different marketing strategy, you can get money into the fund and start charging those fees," Beckwith says. "Someone sees an opportunity and says, 'Well, we can do it better or package it differently and get the attraction.'" ## Accessibility and investor behavior drive the shift The modern ease of investing has also helped propel ETFs to record numbers. Today, accessing the markets is as simple as picking up your phone, [opening a brokerage account](https://money.com/best-online-stock-trading-platforms/) and placing your first commission-free trade. "As financial advisors, we are trying to get people to make smart money decisions and eliminate emotions," Beckwith says, adding that the markets' accessibility is fueling a departure from [conservative investor habits](https://money.com/the-most-boring-way-to-become-a-millionaire/). But as investors take on more risk, some — especially younger ones — are being misled. "TikTok isn't helping. People are so excited to share all their wins on social media. But they never share their losses," Beckwith says. Meanwhile, the market increasingly offers high-risk ETFs, like [leveraged funds targeting individual stock performances](https://money.com/single-stock-etfs-returns-risk/) that aim for big returns but can produce equally sizable losses. The Direxion Daily SK Hynix Bull 2X ETF debuted on July 15. It seeks to generate 200% of the daily performance of South Korean memory chip maker SK Hynix. For investors who incorrectly bet on that stock's single-day performance, their losses can be twice as large. On the bearish side, the Leverage Shares 2x Short SK Hynix Daily ETF debuted on Sept. 3. That fund aims for -2x the daily performance of SK Hynix, meaning investors with higher risk appetites now have the choice of bearish or bullish single-day positions on one of the stocks most susceptible to AI-driven market volatility. ## Stick with what works According to Beckwith, many of these funds have short track records and are developed around new topics that issuers believe they can sell to investors. He adds that in many cases, new ETFs cater to those who are chasing gains. "It's misleading for kids and it's the opposite of what we should be doing for the youth, which is teaching financial literacy and fundamentals," he says. Since the first U.S.-listed ETF launched in January 1993, these funds have grown immensely popular and effective thanks in part to their diversification and low fees. But [that diversification isn't what it used to be](https://money.com/index-fund-diversification-concentration-risk/), copycat funds are proliferating and, with 80% of new ETFs being actively managed, expense ratios continue to creep higher. Yet for everyday investors, the most probable pathway to long-term wealth-building remains unchanged. "For younger people, invest in broad-based, low-cost, tax-efficient index funds regardless of what the index is actually doing," Beckwith says. "Just put your head down and focus on pumping money into it." Over the past 30 years, the S&P 500 — and index funds that track it — have returned an annual gain of around 10%. But with fear and greed being the two dominant emotions that dictate investor behavior, Beckwith acknowledges that chasing the latest trend is human nature. "It's hard to ignore, but focus on simplicity and getting total market exposure," he says. "Stick to the boring, vanilla stuff that works and has worked for decades. That's where all the smart money goes." ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/etf-boom-new-funds-investor-risks/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Investing", "item": "https://money.com/investing/" }, { "@type": "ListItem", "position": 3, "name": "ETFs", "item": "https://money.com/etfs/" }, { "@type": "ListItem", "position": 4, "name": "More Than 1,000 New ETFs Launched This Year. 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