ETFs Are Eating the World. The Right—and Wrong—Ways to Invest

Here’s a concise yet comprehensive summary of Barron’s “ETFs Are Eating the World. The Right—and Wrong—Ways to Invest,” published on July 4, 2025:

🚀 Key Trends Driving the ETF Explosion

• ETFs have surged past 4,000 active funds globally, holding over $11 trillion in assets, now exceeding the number of publicly listed stocks

• In recent years, more than 700 new ETFs launched annually, including exposure to cryptocurrencies, leveraged bets (e.g. on Nvidia), and even private credit—now accessible to retail investors.

🏆 Why ETFs Remain So Popular

• They provide diversification, low operating costs (average fees under 0.16%), tax advantages, and intraday liquidity, unlike traditional mutual funds.

• Major issuers—Vanguard, BlackRock’s iShares, Invesco, and State Street—control nearly $9 trillion in ETF assets, although sophisticated niche fund providers are rapidly expanding.

⚠️ Active, Niche & Complex ETFs: Hidden Risks

• Active ETFs now account for 70% of new launches, including buffered structures that cap both gains and losses. However, most underperform in the long run.

• The $ARK Innovation ETF(ARKK)$ offers a cautionary tale: surged 150% in 2020 but lost ~75% in the following years, trailing the Nasdaq Composite by over 100 percentage points over five years.

  

🌐 Beyond Equity: Bonds, Commodities, Crypto & Private Assets

• Bond ETFs (nearly $2 trillion in assets) offer broad market access, but prices sometimes diverge from NAV during stress (e.g. March 2020) due to valuation lag.

• Commodity ETFs often use futures and can underperform spot rates—e.g. USO deviated during 2020’s oil market dislocations.

• Spot-based crypto ETFs now include Bitcoin and Ethereum trusts, with many more tokens under SEC review. Large, liquid options like the iShares Bitcoin Trust and Fidelity Wise Origin are considered safer.

• Private credit and private equity ETFs (e.g. ERShares) now grant some retail exposure, though they’re restricted in illiquid holdings (<15%) and often carry hidden fees and valuation opacity.

🧭 Recommended ETF Investing Strategy

✅ Stick with the Core

• Use low-cost, broad index ETFs such as the Vanguard Total World Stock ETF and Vanguard Total World Bond ETF for global diversification at minimal cost (~0.06% fee).

⚖️ Sector & Dividend Tilts

• Select Sector SPDRs help over- or underweight specific industries.

• For dividend-focused exposure, consider Schwab US Dividend Equity ETF or ProShares Dividend Aristocrats ETF targeting long-term reliable payers.

🚫 Beware Speculative and Complex Funds

• Avoid leveraged portfolios (e.g. ProShares UltraPro QQQ) unless you're a day trader; volatility drag drastically reduces returns over time despite initial appeal.

• Be cautious with niche and gimmick ETFs—they often carry complex structures and high fees without long‑term track records.

📝 Final Takeaway

While ETFs have revolutionized access to global markets—including traditional stocks, bonds, crypto and private assets—the wisdom of an ETF investment rests on discipline. Use ETFs as building blocks for core holdings: low-cost, liquid, broad-based funds from reputable providers. At the same time, treat niche, leveraged or experimental ETFs with care—they carry outsized risk and can erode value over time if not understood properly.

🏦For SG only, Open a CBA today and enjoy access to a trading limit of up to SGD 20,000 with upcoming 0-commission, unlimited trading on SG, HK, and US stocks, as well as ETFs.

Find out more here：

• Trade on a Cash Boost Account and enjoy up to 6 months of Commission-Free trading.

• 💰Join the TB Contra Telegram Group to Get $10 Trading Vouchers Now🎉

• 💰CBA Mini Course 1: What is Cash Boost Account(CBA)?