Reduction of Average ETF Lifespan to Historic Lows
This is reported by Finway
- Issuers are closing funds without stable investment inflows faster than before.
- The rate of ETF liquidations is rising alongside a record number of new launches.
- The industry is increasingly intolerant of unsuccessful strategies.
Recently, the exchange-traded fund (ETF) market has seen a noticeable decline in the average lifespan of investment products. According to analysts, in 2026, the average lifespan of liquidated ETFs shrank to one year and nine months. In comparison, this figure was three years and six months in 2025, and nearly four years and eight months in 2024.
Reasons for the Decrease in ETF Lifespan
Experts explain this trend by the significant increase in the number of new funds. Last year, over a thousand ETFs entered the market, complicating the attraction of investments and reducing the number of available niches. The competition for investor capital forces issuers to quickly close products that do not demonstrate sufficiently high performance.
“If an investment product does not deliver the expected results within 12–18 months, companies are increasingly deciding to reallocate resources.”
Since the beginning of 2026, over 40 ETFs have been liquidated, significantly more than the 33 funds closed during the same period last year. This indicates a trend towards faster elimination of ineffective products in issuers’ portfolios.
Market Features and Future Challenges
The rise in competition in the ETF market is accompanied by a decrease in barriers to entry for new asset managers. However, even with an easy start, many new funds face challenges in scaling and attracting capital. A significant emphasis is placed on distribution: access of ETFs to brokerage platforms and investment services is considered one of the key factors for achieving a critical mass of assets.
It is worth noting that among new funds, specialized products, particularly cryptocurrency ETFs and leveraged funds, hold special importance. In 2025, about 36% of new ETFs were in these categories, significantly impacting the market structure.
Additionally, in March, there was a capital outflow from major cryptocurrency ETFs: approximately $296 million was withdrawn from spot Bitcoin ETFs, and over $206 million from Ethereum ETFs. A total negative capital movement was recorded in six funds within one week.
At the same time, the New York Stock Exchange listed a spot Bitcoin ETF from Morgan Stanley, indicating further market development and the growing role of innovative financial instruments.