NICK ELWARD: Hello and welcome to the three and three ETF trends update. I'm Nick Elward.

TYLER WILLIAMS: And I'm Tyler Williams.

NICK ELWARD: And today we'll go through three trends that we're seeing in the ETF marketplace.

TYLER WILLIAMS: So Nick it's been a very exciting year again for the ETF industry. What have you been seeing for trends so far in the first half of 2025?

NICK ELWARD: Yeah, the first trend that I'm seeing of late, over the last 90 days, has been an increase in interest in growth-oriented stocks and growth-oriented ETFs. I think it's all been led by the performance of growth over the last 90 days. What we've seen is that if you look at the average large cap growth-oriented ETF or mutual fund relative to its sister value-oriented product, the return for growth has been about 20% and 10% for value.

So that's been the starting point where there's a lot of interest in growth or higher beta-type securities. Thought number one. Then what's driving that has been really technology stocks, momentum-oriented stocks and that's filtered down also to cryptocurrency. Last year we saw Bitcoin really out in front in terms of cryptocurrency. This year we're seeing more altcoins performing well, including Ethereum which is the second largest cryptocurrency.

TYLER WILLIAMS: For the ETF industry it's actually interesting that in cryptocurrency because there's actually maybe more options than ever to achieve your goals in cryptocurrency and express your views through ETFs, not just with spot Bitcoin, but also options overlay strategies as well as defined-outcome ETFs in the cryptocurrency space. So very exciting.

NICK ELWARD: Indeed. So beyond those two trends within growth, we've also seen more IPOs this year. And IPOs are typically from growth-oriented companies. So that too is providing some more confidence in the market for growth-oriented stocks. So a lot of excitement in this space, but at the same time when you look at growth stocks some might say that valuations could be getting stretched so we're getting some feedback that individuals are seeking other asset classes as well.

So what else are you seeing for our second trend outside of growth?

TYLER WILLIAMS: Yeah, exactly, Nick. 2025 has been a very unique year in the sense that very different asset classes all seem to be garnering investor interest. If you look at the top 10 categories for ETF flows for the first half of the year, you'll see large cap blend, large cap growth in there. 

But you also see some interesting ones like precious metals with gold, digital assets with spot Bitcoin ETFs. International equity has also been in favor. And then one that's caught my eye especially is the US large cap value. That's taken in over $25 billion of year-to-date flows. And about half of that has gone into actively managed strategies.

NICK ELWARD: Wow. OK, well tell me more about value and maybe why active seems to be garnering a lot of flows within the value category.

TYLER WILLIAMS: Sure. So within value, if you look at the year-to-date performance and some of the key indices that measure these value growth and blend space, the Russell 1000 Growth, Russell 1000 Value, and S&P 500 have all performed relatively in line at the halfway point of around 6%.

So various asset classes have come in favor and out of favor throughout the year. And investors seem to really be leaning into the value space, especially in the active side, to capture some of that bifurcation.

So for active value managers, there's a higher propensity to differentiate yourself from other strategies because it's a little bit less concentration at those top names, as there might be for the Mag Seven names for the growth space.

NICK ELWARD: Exactly.

TYLER WILLIAMS: A true bottom-up manager that can do deep research on a company, understand management, and express those views in their portfolio, may serve investors over the long run and may have more differentiation versus other peers in the space, which is why many active ETFs in the value category have a high active share.

NICK ELWARD: Great. All right. So what we've seen so far, first, trend growth-oriented ETFs and stocks. Exciting for the first quarter of this year, exciting investors minds. And the second trend being that, well, it's not just growth. It's also some other asset classes that have been interesting to investors as well. So beyond just the asset class level, what's the third trend for us Tyler this quarter?

TYLER WILLIAMS: So, another record setting year for ETFs in terms of launches last year, there is little over 700 ETFs that have launched for the full year. This year at the halfway point, we're already up over 450 new ETFs coming out with only about 88 closures. So that's a 5 to 1 open-to-close ratio, giving investors over 4,400 options to pick from for ETFs in the US space.

NICK ELWARD: That's enormous. Certainly it's a thriving market, the ETF market.

TYLER WILLIAMS: Exactly. And I would say, over half of these now in the marketplace are actively managed strategies. And they're not traditional, just bottom up, large core ETFs, some of these have very specific, outcomes in mind, objectives in mind, whether they're short-term trading vehicles, which have be very popular. Some of these defined-outcome or explicit, risk control, focused ETFs. And then, of course, you do have the traditional bottom-up, equity managers as well in there too. But that's not the whole story. So it's very good to see that, the ETFs are hitting various parts of the industry and investors have plenty of options to choose from when they want to express their investment views.

NICK ELWARD: Indeed.

Well, that's going to do it for us. I'm Nick Elward.

TYLER WILLIAMS: And I'm Tyler Williams. If you'd like to learn more about ETFs, please visit: im.natixis.com.