Over 900 ETFs were launched in the last year. Here are 9 of the most innovative.
Over 900 new funds have been launched in the last 12 months alone, and investors have a dizzying array of choices when it comes to style, theme, and asset class.
In a sea of ETFs, there are standouts, though. Building on our list of ETF Innovators last year, we set out to highlight some funds that we think provide a unique proposition in an increasingly saturated ETF landscape.
To make sure we didn't miss any, Morningstar Direct sent us a list of every new fund that has hit the market in the last year — all 908 of them. We also solicited a few recommendations from industry experts.
The selection process here was subjective and unscientific, and the final list doesn't imply that there aren't other innovative or interesting new funds out there. But generally, these are the funds that caught our eye the most. Strong performance and large AUMs amassed over a short time counted for bonus points.
Below are nine funds launched over the last year that we think stand out in a crowded market. The top five holdings and AUM for each as of late June are also included.
Transatlantic Defense ETF
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Geopolitical tensions are arguably as fraught as they've been since the Cold War, and with Russia continuing its grinding war in Ukraine and voicing other expansionary ambitions, many European member nations of the North Atlantic Treaty Organization are ramping up defense spending at President Trump's request.
That made October 2024 a great time to launch a NATO-focused defense-stock fund. Since hitting the market, it's up 41%.
Ticker: NATO
AUM: $36.9 million
Westwood LBRTY Global Equity ETF
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Staying on geopolitics, the folks at Westwood are convinced that stocks do better in democratically run countries. That's due to factors like higher economic and social stability, greater liquidity levels, and a stronger rule of law, the firm says.
The fund is structured based on the TOBAM LBRTY Index, and its top allocation by far is the US at 76% of its holdings, followed by Canada, the UK, France, and Japan. Notable countries left off the list include China and Russia.
Since its launch in February, the fund is up 9.4%.
Ticker: BFRE
AUM: $2.6 million
iShares Texas Equity ETF
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Don't mess with Texas. Invest in Texas.
At first, I had to chuckle at the concept of investing in a single state. But having spent time in Austin, if there's one state whose residents are most likely to let their state pride inform even their investing approach, it's Texas.
As of now, it's the only state with a stock-focused ETF.
The fund's pitch is compelling, though: Texas is full of incredible companies across a diverse range of industries, from oil and tech to autos and financials.
GMO Beyond China ETF
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With Trump's track record of trade wars with China, and as labor costs rise there relative to its neighbors, asset management heavyweight GMO launched its Beyond China strategy last year.
Eighty percent of its holdings are in firms in Southeast and East Asia that GMO believes will get a boost from supply chain realignment. While there are other ex-China funds, this one focuses exclusively on the reshoring theme. Since launching in mid-February — six weeks before Trump's "Liberation Day" tariffs announcement — the fund is up 8.6%.
Ticker: BCHI
Atlas America Fund
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Roubini, known for his bearish forecasts on markets and the economy, dove into the asset management industry last year with his America Atlas Fund. The NYU professor's thesis behind the fund was that longer-term bonds no longer act as a hedge to stock-market downside with inflation pushing up long-dated yields, and investors needed an alternative.
To act as that alternative, USAF leans into gold and short-term Treasuries. Since its inception in November, it's up about 4.5%.
Ticker: USAF
AUM: $17.4 million
BondBloxx Private Credit CLO ETF
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The merits of investing in private credit for retail investors can be debated, as it carries greater liquidity risk than public assets. But for those who really wanted in on the hot new trade, BondBloxx was the first to make the asset class available in ETF form, making the product truly innovative.
Ticker: PCMM
AUM: $129.9 million
VistaShares Target 15 Berkshire Select Income ETF
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The fund offers an easy way to gain exposure to Warren Buffett's highest-conviction picks by investing in the top 20 companies held by Berkshire Hathaway, as well as the company itself. But perhaps more interesting is the impressive 15% annual return it looks to deliver through generating income from selling options on its holdings.
Ticker: OMAH
Tema Electrification ETF
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Tema and its founder Maurits Pot have been on the ETF forefront of many cutting edge industries and investing trends. They had the only pure-play GLP-1 fund (HRTS)on the market right as the Ozempic craze was heating up. They also launched the American Reshoring ETF in 2023, just in time for Tariff-man 2.0.
Now, the firm is back at it with its Tema Electrification ETF, just as demand for energy is skyrocketing amid a major AI investment boom. The fund will look to capitalize on rising demand for things like data centers, nuclear energy, and electric grid updates.
Ticker: VOLT
AUM: $97.9 million
Fundstrat Granny Shots US Large Cap ETF
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Along with Roubini, Tom Lee was another well-known name to step into the ETF space. So far, Lee is off to a roaring start, with his fund up 9% since November.
The name of the fund is a nod to its uniqueness — a "granny shot" is an unconventional but supposedly more accurate way to shoot a free-throw, and that's the approach Lee aims to take with his fund.
To do so, he has a couple of baskets of long-term themes and short-term themes. The four long-term themes he invests in are energy and cybersecurity, easing monetary conditions, growing Millennial influence, and growing demand for labor. Holdings in this category have to fit into two of the themes.
The three short-term themes include companies that benefit from seasonality, from a recovering manufacturing activity, and those that fit the fund's preference for large-cap growth.
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