The Best and Worst New ETFs of 2025

The exchange-traded fund market is bursting at its seams after adding over 1,000 ETFs so far in 2025, but few have earned a role in investor portfolios. The proverbial spaghetti cannon has fired a torrent of new launches that has easily outstripped last year’s record of 750 new ETFs.

• Over 92% of new ETFs do not track an index.
• Trading tools were the second-most common category group behind equity, and fixed income was a distant third.
• Roughly half of new ETFs were strategies that tracked single stocks, derivative income, defined outcomes, or digital assets.
• An alarming 27% of new ETFs built their strategy around a single stock and added leverage, short exposure, or options overlays.

The Rise of Single-Stock ETFs

Among these launches, single-stock ETFs stand out—not for innovation, but for risk.

Leveraged and inverse ETFs have a bloody history—several exploded in a spectacular fashion, such as VelocityShares Daily Inverse VIX Short-Term Linked ETF XIV and DB Crude Oil Double Short ETN DTO. Others have slowly grinded to zero, like Direxion Daily Gold Miners Bull 2X ETF NUGT and Direxion Daily Gold Miners Bear 2X ETF DUST.

Leveraged ETFs fail because of expensive derivatives and volatility drag—both of which apply to single-stock ETFs as well. ETFs typically gain leverage through total return swaps, an agreement with a counterparty to receive an investment’s returns in exchange for a variable interest rate, a benchmark like the overnight bank funding rate, or OBFR, + 1.00%, for example. With OBFR currently at 3.64%, investors would pay 4.64% annualized to obtain leverage in this example.

Swap financing rates vary, though, especially with more volatile and obscure underlying investments. In its semiannual report, T-REX 2X Long GME Daily Target ETF GMEU reportedly held two swaps to obtain leverage on GameStop GME: one paid OBFR + 6.50%, and the other paid OBFR + 17.50%, meaning its investors are paying between somewhere north of 15% for their 2X exposure to GameStop. Beating that hurdle over the long run is a nearly insurmountable task.

Leveraged ETFs are a losing game, and leveraged single-stock ETFs have the potential to be even worse for investors over the long run because of potentially higher financing fees and volatility. It’s strange to see issuers launch single-stock ETFs in droves, given their poor investment merit. Issuers launched 276 single-stock ETFs not to outperform the market, but because if a stock gained momentum and attracted new investors, the resulting fee revenue would cover all their costs and then some. In other words, ETF issuers are firing the spaghetti cannon at the wall in the hopes that a couple of noodles stick, even if they don’t benefit investors in the long run.

Greenshoots in the ETF Market

The tall task facing ETF issuers is to beat commoditized broad market index ETFs. Investors welcome new compelling strategies and ones that improve on existing strategies or offer refined exposures. For example, Calamos Autocallable Income ETF CAIE improves on the typical autocallable structured note and makes it cheaper and more accessible. Likewise, solid active mutual fund strategies new to ETFs, like Gold-rated Polen Focus Growth ETF PCLG, Bronze-rated Harbor Mid Cap Core ETF EPMB, and Bronze-rated Brown Advisory Sustainable Growth ETF BASG, benefit from cheaper fees and greater tax efficiency than their mutual fund cousins.

With this in mind, our ETF research team analyzed the class of 2025 and voted on the best and worst new ETFs launched this year. Here’s what we found:

Best New ETFs of 2025

• Vanguard High-Yield Active ETF VGHY
• IShares S&P 500 ex S&P 100 ETF XOEF

A Smart Approach to High Yield

Vanguard High-Yield Active ETF’s process rhymes with Silver-rated Vanguard High-Yield Corporate Fund VWEHX, a 48-year-old mutual fund that Vanguard’s Michael Chang comanages with Wellington Management’s Elizabeth Shortsleeve. Its track record over the past 15 years falls just short of the top quintile of high-yield bond funds, but its higher-quality tilt improves its relative risk-adjusted performance.

What’s To Like:

• The high-yield bond market is suitable for active management.
• The fund’s 0.22% fee is among the cheapest in the high-yield bond Morningstar Category.
• The fund’s quality tilt keeps it out of the riskiest high-yield issues.
• The portfolio is well-diversified and leverages Vanguard’s strong resources.

Blending Large- and Mid-Caps

IShares S&P 500 ex S&P 100 ETF gives investors another option when concerned about concentration risk. High-flying mega-caps have opened a chasm between themselves and mid-cap stocks. Investors often use small- or mid-cap funds and strategies that equally weight stocks in the S&P 500 to mitigate the frothiest stocks in the market. As a result, they tend to overcompensate by moving too far down the market-cap ladder. IShares S&P 500 ex S&P 100 ETF provides a market portfolio that sits at the junction of large- and mid-cap territory without giving up the cost efficiency of market-cap weighting or eschewing large-cap stocks altogether.

What’s To Like:

• IShares S&P 500 ex S&P 100 ETF cuts the S&P 500’s P/B ratio by 30%, as of Nov. 30, 2025.
• It finds the middle ground between large- and mid-cap stocks.
• Market-cap weighting effectively leverages the market consensus of a stock’s value.
• It addresses concentration risk more sensibly than some popular alternatives.

Honorable Mentions for Best New ETFs of 2025

• Polen Focus Growth ETF PCLG
• Harbor Mid Cap Core ETF EPMB
• Brown Advisory Sustainable Growth ETF BASG

Worst New ETFs of 2025

• 21Shares 2x Long Dogecoin ETF TXXD
• Roundhill MSTR WeeklyPay ETF ms

Meme Coins Meet Leverage

21Shares 2x Long Dogecoin ETF parlays memecoins with the perils of leveraged ETFs, leading it to be our top pick for worst new ETF of 2025. It simply holds Dogecoin futures and cash collateral yet charges a high fee of 1.89%. Nothing sticks it to the man like high intermediary fees.

Investing in a cryptocurrency that began as a joke and has an infinite supply lacks merit. It hasn’t taken long for risk to materialize in its performance: 21Shares 2x Long Dogecoin ETF is down 35% after launching less than a month ago.

Distribute or Die

Roundhill MSTR WeeklyPay ETF seeks to provide up to 120% exposure to Strategy MSTR and distribute weekly income by inefficiently buying call options each week and returning capital to meet distribution targets. It charges 0.99% to give investors their money back.

On its website, it touts a startling 114.46% distribution rate as of Dec. 16, 2025. You read that right. Distribution rates can be misleading. They annualize the most recent distribution and divide it by the fund’s net asset value. Roundhill MSTR WeeklyPay ETF paid out $0.24 per share on Dec. 16, at which time, its NAV was $10.99. Paying $0.24 each week for a year would equal $12.58 of income, or 114.46% of Roundhill MSTR WeeklyPay ETF’s $10.99 NAV.

If it sounds too good to be true, that’s because it is. Distributions have declined since inception alongside the ETF’s NAV and Strategy’s stock price, leading to an abysmal total return. Since launching on July 24, 2025, Roundhill MSTR WeeklyPay ETF is down 69% including its weekly distributions.

Honorable Mentions for Worst ETFs of 2025

• Tuttle Capital MSTR 0DTE Covered Call ETF MSTK
• Roundhill Meme Stock ETF MEME

The Best and Worst New ETFs Over the Years

Morningstar's Best and Worst New ETFs Since 2015