Why Some Active ETFs Fail in 9 Charts

Last year was the best year for active exchange-traded fund launches, but also the worst ever for mergers and liquidations. In 2025, about 1,000 active ETFs launched, and around 150 were shuttered.

Most of the shuttered ETFs had small asset bases. Funds cost money to operate, and those that don’t garner enough assets are susceptible to being liquidated or merged away. Assuming ETFs have about $250,000 of annual fixed costs, the breakeven for funds would be about $33 million (active ETFs have an average management fee of 67 basis points and a net expense ratio of 75 basis points). Of the roughly 150 funds that closed last year, only six had more than $50 million in assets at the start of 2025. Most of the strategies had less than $25 million.

Most of the closed funds (meaning they cease to exist) had only been in existence for about 1.75 years, which shows asset managers give the ETFs a short window in which to turn a profit. About half the strategies closed last year were equity funds.

Of the six closures that had more than $50 million going into 2025, no common theme stood out. The largest closure was iShares Frontier and Select EM ETF FM, which had more than $150 million at the start of 2025. Emerging markets had been a tough area, with paltry returns leading up to 2025, so BlackRock liquidating a focused, emerging-market offering early in the year wasn’t too surprising. Unfortunately for investors, emerging markets rebounded in 2025.

Last year, Stone Ridge and Innovator, which is getting acquired by Goldman Sachs, led the way with 30 and 16 closures, respectively. Most of Stone Ridge’s liquidations were from its LifeX retirement series ETFs that were designed to give investors monthly cash flows. Innovator shuttered several buffer ETFs that fall into nontraditional equity. These ETFs allow investors to participate in some of the market’s upside while protecting losses up to a certain point, known as the buffer. For example, an ETF with a 12 buffer would shield investors from losses of up to 12%. If the market fell more, investors would incur the difference between the buffer level and the actual loss.

Larger and more popular fund companies shut active ETFs, too. Last year, Ark Invest and 21Shares closed all but one of their digital assets strategies that were launched in late 2023. As environmental, social, and governance funds continued to see outflows, Fidelity liquidated four ESG-oriented strategies in late 2025.

Since the launch of the first active ETF in late 2007, roughly 700 have been closed. Invesco tops the list with roughly 100 closures, but many of those were more passive strategies. For example, most of the Invesco closures happened in 2018, when the firm cleaned up its PowerShares lineup, including several equal-weighted sector ETFs.

Other firms that have had success with active ETFs have seen some busts as well. For example, JPMorgan has shuttered 11 strategies. These include alternative and thematic strategies. In 2025, the firm cut three funds—two focused on sustainability and one mortgage-backed security offering.

Last year, short-term trading-oriented active ETF launches spiked with more than 340 launches but also counted 17 casualties. Short-term-oriented active ETFs include those that use leverage, try to move in the opposite direction of specific market segments, or offer exposure to niche areas or single stocks. Many investors use such ETFs to make short-term hedges or wagers in their portfolios.

Since late 2007, roughly 425 short-term-oriented strategies have been launched, and 55 have been shuttered. These strategies are extremely volatile. For example, Direxion Daily Googl Bull 2x Shares ETF GGLL seeks to return double the daily return of Google. As Google’s stock jumped in the fourth quarter of last year, the ETF’s assets jumped from under $500 million to more than $1 billion. Only three of these strategies had more than $1 billion in assets at the end of the year, and only 40% had more than $25 million in assets, which means this is an area that could see more closures.

Defiance and AXS led the way with short-term, trading-oriented active ETF closures last year. None had more than $5 million in assets at the end of 2024. Five were launched and shuttered in 2025.

About half of roughly 2,700 active ETFs had more than $50 million in assets as of the end of 2025, leaving 1,260 strategies with less than $50 million. Assuming asset managers give strategies about a year and a half before considering closing, the trend in closures should continue to accelerate—462 of the 1,260 strategies have been in existence for more than a year and a half.

Of those 462 strategies, roughly one-fourth fell in nontraditional equity. These include ETFs in the derivative income, defined outcome, long-short equity, and equity hedged Morningstar Categories.

More than 25 firms have 10 or more offerings with less than $50 million in assets, as of December 2025. Themes ETF Trust, Graniteshares, Innovator, and Defiance lead the way with more than 50 ETFs each. While many of these strategies were only launched last year, as history has shown, asset managers give these ETFs a limited amount of time to turn profitable. Still, top asset managers like Fidelity and JPMorgan are included in the list, which means few firms are safe from busts.

If you are looking for an active ETF with a good chance of being around for a while, picking one with more assets would be a good bet. While other factors, such as fund age, fees, and performance, can influence ETF and mutual fund viability, too, assets are an obvious and easy metric to find. Of the firms with more than 20 active ETFs, Dimensional Fund Advisors and Capital Group are the only firms that had none under $50 million in assets as of December 2025.