What are the benefits of ETFs?

Thanks to their unique trading characteristics, ETFs can offer investors several benefits, including:

• Portfolio diversification: ETFs enable investors to access up to thousands of securities across a range of markets, benchmarks and asset classes via a single security, providing instant portfolio diversification and reducing concentration risk.
• Intraday liquidity: Unlike mutual funds, which are traded only once a day, ETFs can be bought and sold instantly at market prices during standard exchange hours.
• Lower costs: Many ETFs are passive and do not require expensive research and portfolio managers. As such, they generally have lower ongoing management fees. ETFs also generally have lower distribution and servicing costs compared with mutual funds.
• Tax efficiency: In the U.S., ETFs are often considered more tax-efficient than mutual funds due their ability to transfer securities “in-kind.” This can allow them to rebalance the portfolio and meet redemption requests without selling holdings, reducing capital gains distributions to investors in the fund.
• Transparency: Most ETFs disclose a complete list of holdings daily (versus quarterly for mutual funds), which increases predictability and oversight.  

How are global ETF markets performing?

Global ETF markets continue to grow. According to J.P. Morgan Global Research, total ETF assets under management (AUM) amounted to around $22.1 trillion globally as of end-April 2026, up 43% from a year earlier. In addition, the number of listed ETFs globally has increased to nearly 17,000. 

What are the latest developments in ETF markets?

• Active ETFs continue to scale rapidly: Active products have represented more than 60% of new ETF launches in each of the past six years. In the U.S., active ETFs now outnumber passive ETFs, with AUM growing around 80% year over year to $1.8 trillion. They are also a key focus for both issuers and investors in international markets such as EMEA, where AUM has roughly doubled year over year to $122 billion.
• Options-based ETFs are surging: Options-based ETFs use options contracts (calls and puts) to pursue specific goals — most commonly generating income (yield) and reducing downside risk (hedging). Assets in U.S. options-based ETF strategies rose about 50% year over year to roughly $280 billion (as of mid-May 2026). Call overwriting funds, which sell call options to generate income, remain the largest segment. However, the fastest growth is in structured-outcome ETFs, which aim to deliver results similar to structured products.
• The growth of levered ETFs: Levered ETFs, which use debt and financial derivatives to multiply the daily return of an underlying benchmark, have also grown in popularity. Over the past decade, AUM in U.S.-listed levered ETFs has increased nearly sixfold to around $175 billion in equities and over $190 billion across asset classes (as of mid-May 2026). Growth has also become increasingly concentrated in technology-linked exposures (including Nasdaq) and single-stock products.
• Thematic ETFs are experiencing a revival: Thematic ETFs benefited early in the pandemic as investor demand rose for innovation- and digitalization-linked exposures. Many of these themes then underperformed materially in late 2021 through 2022 amid crowding and valuation compression, resulting in a prolonged lull in demand. However, they have rebounded over the past year, with themes linked to AI development and the related infrastructure buildout attracting meaningful inflows.