Charting the Next Stage for ETFs: Growth, Innovation and the Future of Fund Structure

Exchange-traded funds have become one of the most successful financial innovations of the past thirty years. With more than $11 trillion in assets in the United States and steady inflows across every market segment, ETFs are now indispensable building blocks for investors seeking cost efficiency, liquidity, and diversification.

That momentum is the backdrop for ICI’s inaugural ETF conference, which convenes on September 8 in Nashville. The event will bring together sponsors, service providers, liquidity providers, regulators and other market participants across the ETF ecosystem to examine how the industry is evolving and what trends are emerging on the horizon.

ETF Share Class Relief: A Defining Issue

At the top of the agenda is the question of ETF share class relief. More than seventy applications are now pending with the SEC to allow funds to offer both mutual fund and ETF share classes.

The industry is hard at work preparing for operational readiness, and the potential for change is significant. Panelists will discuss how the industry is preparing and what SEC action could mean for investors and markets.

These sessions will build on the work ICI has done all year to support its members as they prepare for this coming sea change for the industry. Beginning in April, ICI organized a series of working groups to examine the most critical operational considerations including tax-free conversion mechanics, technology and system considerations, reporting requirements, intermediary considerations, and investor experience.

These working groups and separate informational sessions drew hundreds of participants and produced a day-one process to handle tax-free exchanges between mutual fund and ETF share classes. They also laid the groundwork for a forthcoming, comprehensive white paper that will serve as a playbook for members considering an ETF share class launch.

The ETF Conference sessions on share class relief will build on these efforts, offering the industry a chance to look ahead to implementation.

Innovation Beyond Indexing

ETFs first grew to prominence as low-cost tools for tracking broad indexes like the S&P 500, and these products are still seeing large inflows. But in recent years, ETFs have also been instruments for innovation. Actively managed ETFs, buffered, and outcome-oriented products are attracting attention. Alternative investments like private credit and other strategies that were once only available to institutions and accredited investors are also increasingly available in ETF form.

This expansion reflects investor demand. According to ICI data, net issuance of ETFs has totaled more than $5 trillion over the past decade, and total assets under management have surpassed $11 trillion. Demand is especially strong for bond and active strategies, which have fueled much of the recent growth.

Managing Growth, Managing Risk

With growth and innovation comes challenges. As ETFs continue to expand, one of the most important questions how marketplace infrastructure will keep pace with a rapidly growing and increasingly diverse product set.

Capacity across trading, settlement, and operational systems will be a central focus, alongside how those systems adapt to more complex structures.

Industry leaders are also considering how best to help investors navigate a crowded product landscape and information environment that is often noisy. These themes will be front and center as panelists explore how to balance innovation with resiliency.

A Forum for the Entire Ecosystem

The ETF conference is designed to bring together every part of the ETF ecosystem: sponsors, service providers, liquidity providers, exchanges, regulators and other market participants. Together, they will examine how the industry can sustain its record growth, deliver innovation responsibly, and serve the long-term interests of investors. As ETFs continue to shape the regulated funds industry, this conversation couldn’t come at a better time.