The Best and Worst New ETFs of 2024

This year’s surge in new exchange-traded funds (ETFs) didn’t just break previous launch records—it obliterated them.

As of December 5, 2024, over 650 new ETFs have launched, surpassing last year’s record by more than 150. This growth trend began with the 2019 SEC "ETF Rule," which streamlined the process for bringing new ETFs to market.

Key Trends Driving ETF Growth in 2024

Options-related ETFs (25% of new launches), leveraged/inverse ETFs (10%), and digital assets ETFs (5%) dominated the landscape.
Active ETFs accounted for 78% of new launches. While technically "active," many employ rules-based strategies with minimal discretionary management.

The ETF market now boasts 3,850 available funds, with over 5,800 launched since the 1993 debut of SPDR S&P 500 ETF (SPY). Notably, a third of these have since closed. Despite the influx, 2024 closures (160 year-to-date) are projected to fall short of 2023’s record 202 closures.

Asset concentration remains stark: the top 40 ETFs hold over half of the industry’s $10.7 trillion in assets. iShares Bitcoin Trust (IBIT) recently joined this elite group, achieving the fastest asset growth in ETF history.

Best New ETFs of 2024

Our research team evaluated 2024’s ETF launches and identified standout performers leveraging proven active strategies with decades-long track records.

Top Picks

Jensen Quality Growth ETF (JGRW)
- Why it shines: Mirrors a successful mutual fund with a disciplined, high-conviction process targeting companies with 15%+ ROE for 10+ years.
- Performance: Steady returns with lower volatility; tax-efficient ETF structure enhances appeal.
- Expert insight:
  "The strategy lags in rallies but excels in downturns, delivering strong risk-adjusted results."
  — Dan Culloton, Morningstar Director
Neuberger Berman Small-Mid Cap ETF (NBSM)
- Why it shines: Adapts a 30-year-old separate account strategy focused on high-quality, low-debt smid-cap companies.
- Performance: Smoother ride than peers, with robust downside protection.
- Expert insight:
  "The team’s disciplined approach and research resources make this a compelling long-term holding."
  — Chris Tate, Morningstar Senior Analyst

👉 Discover more top-performing ETFs

Honorable Mentions

Oakmark US Large Cap ETF (OAKM)
MFS Active Value ETF (MFSV)
iShares Bitcoin Trust (IBIT)

Worst New ETFs of 2024

These ETFs exemplify risky, short-term strategies that often undermine long-term investor success.

Bottom Picks

Defiance Daily Target 2X Long MSTR ETF (MSTX)
- Issues:
  - Tracks MicroStrategy (MSTR), a leveraged bitcoin proxy trading at 2–3x its bitcoin holdings’ value.
  - Uses imprecise swaps and options for 2x daily leverage, magnifying losses more than gains.
  - 1.29% fee plus volatility drag erode returns.
- Verdict: "A Russian nesting doll of problems."
YieldMax Short NVDA Option Income Strategy ETF (DIPS)
- Issues:
  - Overly complex 5-leg options strategy combining short NVDA exposure with put spreads and OTM calls.
  - Underperformed NVDA’s gains by 5%+ since inception.
- Verdict: "Income isn’t worth the tax drag or tail risk."

👉 Avoid these high-risk ETFs

Honorable Mentions

T-Rex 2x Long MSTR Daily Target ETF (MSTU)
Direxion Daily Uranium Bull 2X ETF (URAA)
2x Ether ETF (ETHU)

FAQ

Q: Why are active ETFs booming?
A: Lower costs, tax efficiency, and daily transparency have driven adoption since the 2019 ETF Rule.

Q: Are leveraged ETFs ever a good idea?
A: Rarely. Volatility drag and high closure rates (50% of leveraged ETFs fail) make them risky long-term holds.

Q: How do I evaluate a new ETF?
A: Look for:

Proven strategy track records.
Transparent, low-cost structures.
Aligns with your investment goals.

Data as of December 2024. The author owns shares in securities mentioned. Learn more about our editorial policy.


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