INVESTING
The message is clear: ETFs are no longer dull, passive core holdings for just minimal monitoring. Instead, they have graduated, becoming active and tactical tools for plugged-in investors.
The Rise of Commodities ETFs
Exchange-traded funds have also emerged as a convenient, popular way for investors to play the commodities market. This is particularly apparent in precious metals, which have become high-profile investments at a time when stubborn inflation and geopolitical chaos have pushed gold prices to all-time highs( gold hit $ 4,380 per ounce in October).
As a result, the SPDR Gold Shares fund( GLD), which debuted in 2004, has rocketed higher. The same thing happened for other ETFs tied to precious metals, which have topped record levels. Gold has even outperformed bitcoin, proving itself as a global asset with staying power and not something outdated.
The performance pop experienced by the entire commodities sector hasn’ t hurt, and it’ s the renewed interest in precious metals that has also roused interest in commodities ETFs, which can serve as a portfolio diversifier and inflation hedge.
Amid the warming investor sentiment, broadly diversified commodities funds like the USCF SummerHaven Dynamic Commodity Strategy No K-1 Fund( SDCI) have delivered better performance against leading asset classes like bonds, stocks and real estate. This has caught the attention of advisors who may have been underweight or lacking commodities exposure for client portfolios.
Regulatory Shifts
The ETF landscape has meanwhile recently been rocked by two major regulatory changes. The first was a shift by the Securities and Exchange Commission to a more accommodating stance for securities and ETFs tied to cryptocurrencies.
In January 2025, the SEC launched a“ Crypto Task Force,” whose mission was to lay out practical steps for asset managers wanting to register crypto-linked securities with the agency. Before that, there was no guidance for these managers, which made compliance difficult.
In July, the agency then followed with“ Project Crypto,” an initiative unveiled by agency chairman Paul S. Atkins meant to show Wall Street how the SEC’ s priority had flipped to writing clearer rules and building a comprehensive framework for regulating digital assets— rather than prioritizing enforcement actions.
The SEC’ s second major shift on ETFs this year has been to ease the launch of the ETF versions of mutual funds by offering exemptions from certain regulations under the Investment Company Act. This exemptive relief opened the floodgates of asset flows and new ETF listings— and for their new strategies, a trend unlikely to change. It will also mean greater competition for assets in the active category. And the ETF managers with the best performance will garner the biggest inflows.
ETFs linked to important economic trends and themes are also likely to play a bigger role in portfolios everywhere.“ Technology and digital asset ETFs targeting AI, blockchain, and crypto names continue to surge while leveraged singlestock ETFs continue to cater to tactical traders,” says Little.“ Investor demand is really driving the activity right now.”
What’ s more, ETF managers with attractive yields and specialized strategies— say, to protect investor principal— are
The performance pop experienced by the entire commodities sector hasn’ t hurt, and it’ s the renewed interest in precious metals that has also roused interest in commodities ETFs, which can serve as a portfolio diversifier and inflation hedge.
active vehicles accounted for nearly 85 % of product launches in 2025.
“ The SEC’ s decision to grant ETF share class relief marks a seismic shift in the industry,” says Bilal Little, director of exchange-traded funds at the New York Stock Exchange.“ But this isn’ t just about regulatory housekeeping. What we are seeing is modernization that could reshape the fund structure for decades to come and really accelerate ETF migration from mutual funds to ETFs for advisors and investors.”
What Comes Next?
There’ s an old saying that history doesn’ t repeat but it does rhyme. That may certainly apply to what lies ahead in 2026 for the ETF industry.
Active strategies accounted for the vast majority of new ETF products introduced in 2025. This is a sign that asset managers are now prioritizing the ETF wrapper likely to experience continued growth. In 2025, covered call funds, buffered ETFs and ultrashort bond ETFs appealed to investors searching for enhanced yield and capital protection in periods of heightened volatility.
While the future of ETFs is certainly bright, it will become a more competitive arena. What does that mean for investors? That there are likely to be more ETF choices with tighter investment focuses and lower fees.
“ 2026 is setting up to be a test of whether firms with no ETF footprint can establish a foothold in an increasingly competitive industry,” says Baiocchi. As we look ahead to a new year, the question isn’ t whether ETFs will grow— it’ s how fast and in what direction.
RON DELEGGE II is the founder of ETFguide. com and author of several books, including Habits of the Investing Greats and Portfolio Architecture: A Handbook for Investors.
36 | FINANCIAL ADVISOR MAGAZINE | DECEMBER 2025 WWW. FA-MAG. COM