The ETF Graveyard Is Growing and the Industry Itself Is to Blame
Exchange-traded funds are one of the great financial success stories of the past three decades. Global ETF assets reached $13.8 trillion by the end of 2024, and the format has reshaped how tens of millions of people invest, cutting costs and democratising access to everything from the S&P 500 to obscure emerging-market bonds. But behind that headline success lies a graveyard filling up faster than ever, and the average fund is living for a shorter time before it gets shut down.
A Glut of Launches, a Wall of Closures
The numbers tell a striking story. ETF providers launched more than 1,100 new ETFs in 2026 alone — a pace that has become routine in recent years. Yet 221 funds shut down in 2025, virtually identical to the 220 closures recorded in 2024 and continuing a pattern of mass culling that is accelerating the turnover rate across the entire industry. Separately, a total of 622 closures were recorded globally in 2024, with the United States accounting for the highest share at 196 funds.
The driving force is brutal and simple: asset managers are impatient for scale and willing to pull products that fail to reach it quickly. The industry rule of thumb is that a fund needs roughly $50 million in assets under management to be profitable for its issuer, and funds stalling below that threshold increasingly face the axe. When closures in 2023 were examined, the average liquidated fund held just $54 million in assets and was 5.4 years old — representing a meaningful shrinkage in patience. In 2023, the typical closed commodities ETF had been running for 8.5 years with only $25 million in assets on average — an example of older-style patience now disappearing.
The Single-Stock ETF Problem
The fastest-growing and fastest-dying category of funds is single-stock leveraged ETFs. Of the roughly 600 trading-tool ETFs available to US investors by the end of 2025, around half were spawned in 2025 alone. Nearly all of those new listings aim to replicate two or three times the daily return of a single stock or cryptocurrency. These products are by design short-lived. During the steep market drop of 2020, nearly 30% of trading-tool ETFs closed in a single year. Leveraged and inverse ETFs of all kinds have a 52% lifetime closure rate compared with 31% for conventional funds, according to Morningstar data.
The appeal to asset managers is obvious. Launching a leveraged single-stock ETF is cheap and fast, and if markets move in a trader's favour, inflows can be spectacular. The CSOP SK Hynix Daily 2x Leveraged ETF, listed in Hong Kong in October 2025, attracted nearly $1.6 billion in just a few months — more than comparable Tesla and Microsoft leveraged products. But for every blockbuster, dozens of similar products wither in obscurity before being quietly shuttered.
Why Wall Street Keeps Playing the Game
The economics of the ETF industry create a powerful incentive to keep launching despite the waste. A fund management firm earns a fee on whatever assets it accumulates, even if that fee is tiny. Launching a new fund is a lottery ticket: the cost of entry is low, but the potential prize — a product that catches a trend and rapidly accumulates billions — is enormous. Vanguard's VOO, the S&P 500 ETF, overtook State Street's SPY as the world's largest ETF in February 2025. That throne is worth immense annual revenue and is the model every new entrant is chasing.
The result is an industry that simultaneously celebrates its own impressive growth while producing a record churn of short-lived, underpowered products that end up costing their investors time and inconvenience. As Wall Street grows ever more impatient for scale, the average ETF's lifespan shrinks a little more every year.
