Why Are There So Many New Single-Stock ETFs?

Sometimes one is all you need.

More than half of ETFs with initial prospectuses filed on or before June 30 of this year are single-stock funds, including those using leverage and derivatives, according to Morningstar’s latest report analyzing the state of the US ETF industry. This shouldn’t come as much of a surprise to anyone who’s spent any time parsing through new filings: Earlier this month, Canary Capital launched a staked ETF tracking the spot price of TRX, the native utility token of the TRON blockchain network, and REX Shares began trading a leveraged fund tracking Hyperliquid Strategies.

“The industry has evolved from a very small group of pretty sensible strategies — like SPY, a pretty plain vanilla ETF — to a decade later, bond ETFs and active ETFs,” said Zachary Evens, passive strategies analyst at Morningstar. “The market has gone from [being like] a stand at a farmer’s market, to a grocery store, to a Walmart, where now you can get almost anything you want, good or bad.”

A Not-So-Rare Breed

The single-stock wave goes beyond those funds, which have only been on the market since 2022. Certain categories of products that offer investors specific results, like defined outcomes, have become increasingly popular since the ETF Rule in 2019, which did away with issuers’ need to get exemptive relief under the ’40 Act, making more complicated strategies easier to launch in the ETF wrapper. Since then, companies have been able to bring nicher and nicher products to market, with launch decisions reflecting the economic reality of being an issuer in 2026, not necessarily any huge demand on the part of investors.

Still, the single-stock market, while booming in terms of launches, is also highly concentrated. According to data from ETF.com:

• Of the roughly 397 single-stock ETFs available at the end of 2025, nearly three-quarters (296 funds) launched that year alone.
• The 10 largest single-stock ETFs account for roughly 44% of the category’s total assets.

On Acquisition Alert: It may also be the case that issuers are innovating in order to draw attention from larger asset managers and potentially get bought, said Aga Kuplinska, senior VP of product development at Tidal Financial Group. “All these recent acquisitions, they only motivate smaller issuers more to do what they’re doing,” Kuplinska said. “If you focus on highly specialized, differentiated markets, someone will want to pay for it.”