Who even has the energy anymore?

Oil prices have risen and fallen at a dizzying pace this year amid uncertainty over the war with Iran, touching $90 a barrel last week, as US forces marked nearly two weeks of strikes against the country. A pause in attacks this week, without an official ceasefire, sent prices downward: The United States Oil Fund (USO) dropped 8% over five days. But that shouldn’t necessarily spook investors, particularly those in the wider energy sector and the exchange traded funds focused on it, according to Michael Arone, a chief investment strategist for State Street Investment Management.

“What many investors overlook is that energy was actually rallying prior to the outbreak of the conflict at the end of February,” he said. Thanks to factors like loosened regulations, capital discipline and more innovation around oil production and exploration, “year over year, [companies’] profit margins have almost doubled.”

Nuclear Winter

Despite the mind-boggling needs for more energy to power artificial intelligence data centers, nuclear energy has not been having a great year as a whole. Meanwhile, clean energy has performed better, with tailwinds in particular for, well, wind power. Overall, there is potential for energy in the coming months, thanks to those AI buildouts, Arone said. And for those worried about tech companies’ enormous capital expenditures, allocations to energy, with its strong fundamentals, are an alternative, he noted. “This gives investors an opportunity to diversify away from some of the AI concentration.”

Still, the performance figures show that things are far from equal for categories and subcategories:

• The $2 billion USO is up 75% year to date, while the $3.5 billion State Street SPDR S&P Oil and Gas Exploration and Production ETF (XOP) is up 29% and the $39 billion State Street Energy Select Sector SPDR ETF (XLE) is up 26%.
• The $3.9 billion VanEck Uranium and Nuclear ETF (NLR) is down 20% so far this year, while the $2.3 billion iShares Global Clean Energy ETF (ICLN) is up about 1% and the $280 million First Trust Global Wind Energy ETF (FAN) is up 10%.

Foot Off the Gas: The energy sector has climbed 13% this year, which is about as much as the airline industry has fallen, Raymond James Chief Investment Officer Larry Adam wrote in a July 24 commentary. After funneling nearly $12 billion into US equity energy ETFs during the first three months of the year, investors pulled money during each of the three months in the second quarter, totaling about $4.5 billion, per data from Morningstar Direct. Flows into energy master limited partnership ETFs have been positive every month of the year but have slowed down.

“Once a diplomatic off-ramp emerges, we expect oil to cool and these trends to reverse,” Adam wrote. “That supports our positive view on consumer discretionary and industrials, while remaining underweight energy.”

The ETF market is looking a lot like showings of Christopher Nolan’s The Odyssey: crowded and breaking records.

There have been 868 ETF launches in the US through July 27, according to CFRA data, putting the market easily on track for yet another record-breaking year. Single-stock and artificial intelligence, or other tech-related funds, have been especially popular, said Deborah Fuhr, founder of the research firm ETFGI. It’s no wonder issuers want to bring more of these funds to market: Investors have poured money into funds that give them leveraged exposure to big names such as Nvidia and Tesla, while products like the Global X Robotics & Artificial Intelligence ETF (BOTZ) have garnered billions of dollars in assets. Now that retail and institutional investors alike have embraced ETFs as easy-to-use and liquid ways to get exposure to some of the most dynamic trends in the market, introduction of new funds isn’t likely to slow down.

“We will continue to see the new launches growing,” Fuhr said. She added that we’ll likely continue to also see existing products, like mutual funds and separately managed accounts, converted to the ETF wrapper.

Searching for ETF Ithaca

A launch far from guarantees a fund’s survival, but that’s not stopping issuers from seeing what sticks. “Right now, the US ETF industry is still in growth mode and newer, smaller issuers are experimenting with multiple launches,” said Aniket Ullal, head of ETF research at CFRA. “We expect only a fraction of these launches to succeed, and it is possible we may see a spike in closures in two to three years.”

But when a fund strikes the right chord, it can take off quickly:

• The Roundhill Memory ETF (DRAM), which launched in April, has already amassed nearly $25 billion in assets.
• The ProShares GENIUS Money Market ETF (IQMM) hit the market in February and has AUM of roughly $18 billion.

Is this pace sustainable? Steve Foy, senior vice president of trading at white-label ETF platform Tidal Financial Group, said that at the level that matters for business sustainability, assets and revenue, the industry’s growth is structural and has significant momentum. “As in any industry, today’s innovations will keep iterating, and investors’ ability to pivot quickly between offerings is one of the hallmarks and strengths of the industry that drives this overall growth.”

Crowded Seas: Looking beyond the US, the global industry has seen a significant increase in the number of new launches over the past few years. In the first half of 2026, there were 1,798 new ETFs launched around the world compared with just 805 in the first half of 2022, Fuhr said. The US and Asia Pacific (excluding Japan) launched the largest number of funds this year, while Latin America had just 34.

Bitcoin ETFs just lost their Snapstreak.

Investors pulled money out of spot Bitcoin funds at the end of last week, breaking a seven-day stretch that brought in more than $1 billion, according to Morningstar data. Outflows on Thursday and Friday erased nearly half of those gains, but as the price of Bitcoin stabilizes, analysts expect increased inflows through the second half of the year. A major driver of those assets could be allocations from financial advisors.

“The marginal buyer of a crypto ETF right now is probably a financial advisor,” said Matt Hougan, chief investment officer at Bitwise Asset Management. He noted that advisors who meet with clients quarterly may have been reluctant to show Bitcoin on statements during a bumpy first half. “Once they got past that Q2 mark, I think you started to see some allocations from people who think prices will likely be substantially higher by the end of the year.”

Seeking Clarity

Uncertainty around the Clarity Act is a likely driver of some of last week’s outflows. The bill would create a regulatory framework and give institutional investors the legal… well, clarity … they’ve been waiting for. “It’s been sort of a simultaneous tailwind and headwind over the past few weeks,” said Roxanna Islam, head of sector and industry research at TMX VettaFi. “It’s just really hard to tell where sentiment is now.”

Some lower-cost Bitcoin ETFs, like the Grayscale Bitcoin Mini Trust ETF (BTC), are seeing fewer outflows than their more expensive peers, which may imply retail investors trying to pile back in at “what they see as bottom,” Islam said. “But overall, we’re still seeing a lot of ambiguity on the institutional side.”

The price of Bitcoin has dropped over the last year, but has stabilized in the last month or so:

• After peaking at more than $120,000 per coin in October of 2025, the price of Bitcoin dropped from around $80,000 in May to near $60,000 at the beginning of June.
• The price hovered around $63,000 at the close of markets Tuesday.

On the Up and Up. Despite the recent outflows, Bitcoin will probably continue to attract investors through the second half of the year, said Hougan. “A lot of those flows that we were seeing were true long-term investor flows that had been on the sidelines in Q1 and Q2, waiting for signs of stability,” he said. “They saw that stability, and they re-entered the market.”