More Than a Third of This Year's New ETFs Use Leverage

ETF assets are up more than 250 percent since the October 2022 low, but assets in ETFs using derivatives are up more than 450 percent. Over 30 percent of this year's 3,363 new launches use leverage — a warning for Ethiopia as it writes its own fund rulebook.

Exchange-traded fund assets have risen more than 250 percent since the S&P 500's October 2022 low. Assets in ETFs that use derivatives have risen more than 450 percent. Issuers launched 3,363 new ETFs, and more than 30 percent of this year's launches use leverage, according to VettaFi.

The growth is not only fast, it is changing shape. The ETF began as the cheapest way to hold a market; a growing share of the newest products are instruments for amplifying a bet on one.

The money is moving, not arriving

Equity ETFs attracted 3.2 trillion dollars while equity mutual funds lost 3.3 trillion dollars — close enough to a transfer that it should be read as one. Money market fund assets rose 74 percent, or 3.4 trillion dollars.

So two things happened at once. Investors moved from one wrapper to a cheaper, more liquid wrapper holding much the same assets, and separately parked an enormous sum in cash. That is not the profile of a market convinced of anything. It is a market that wants to be able to change its mind quickly.

The product expansion now reaches private companies. 21Shares listed CLAU in Vienna, billed as Europe's first exchange-traded product offering exposure to Anthropic's implied pre-IPO valuation — a tradable instrument tracking a price that is itself an estimate of a company that has not sold shares to the public.

Why this reaches Addis

Ethiopia is writing the rulebook for collective investment schemes now, with asset managers setting up in Addis Abeba to serve a market that barely exists yet. A new industry gets to choose which part of this history it imports.

The cheap index fund and the thirty-times-levered single-stock product are built on the same legal plumbing. Jurisdictions that wrote permissive fund rules got both. The regulator's leverage — in the ordinary sense — is at its maximum before the first fund launches, and falls sharply afterwards, when every restriction becomes a complaint from an existing business.

Open

VettaFi's figures cover launches rather than assets, so how much money actually sits in the levered products is not stated here, nor is the redemption experience of those funds in a drawdown.

Sources: Venture Capital, 15 October 2026