The Best and Worst New ETFs of 2024

·

The year 2024 has been a historic one for the exchange-traded fund (ETF) market—not just in terms of volume, but in the sheer pace and innovation driving new product launches. With over 650 new ETFs introduced by early December, this year has shattered the previous record by more than 150 offerings. Since the U.S. Securities and Exchange Commission’s “ETF Rule” took effect in 2019—streamlining the approval process—each year has set a new benchmark. But 2024 stands out.

Behind this explosion are three dominant trends shaping the landscape:

Additionally, active ETFs now represent 78% of all new launches. While many are technically “active,” they often rely on systematic, rules-based approaches rather than traditional discretionary management. This shift reflects investor demand for tax efficiency, lower costs, and transparency—hallmarks of the ETF structure.

Despite this growth, market concentration remains high. Over half of the $10.7 trillion in ETF assets is held in just the top 40 funds—many of which have been around for over a decade. However, one newcomer has disrupted this elite group: iShares Bitcoin Trust (IBIT), which achieved the fastest asset accumulation in ETF history.

With so many new choices—and risks—our research team has evaluated the most impactful 2024 launches to identify the best and worst new ETFs based on strategy, sustainability, and long-term investor value.

👉 Discover how top-performing ETFs are reshaping investment portfolios in 2024.

Top New Active ETFs: Proven Strategies, Fresh Packaging

As passive index ETFs become increasingly commoditized, innovation is shifting toward active management in an ETF wrapper. This year’s best new ETFs stand out not because they’re novel—but because they bring decades-tested strategies to a more efficient structure.

Two standout launches exemplify this trend:

These funds leverage investment processes refined over 30+ years, giving investors confidence beyond typical “backtested” strategies with no real-world track record.

Why Jensen Quality Growth ETF (JGRW) Stands Out

The Jensen Quality Growth strategy has long delivered consistent, low-volatility returns through a disciplined, bottom-up approach. The ETF version, launched in August 2024, offers the same rigor with improved tax efficiency.

Key aspects of the strategy:

Unlike momentum-driven funds, JGRW avoids speculative high-flyers—even if they include giants like Apple, Microsoft, or Alphabet. Instead, it favors resilient businesses such as Zoetis and McDonald’s franchise operators, which have weathered economic cycles with stable earnings.

This approach leads to strong risk-adjusted returns: underperformance during bull markets is offset by resilience in downturns. The mutual fund version saw a 7% capital gains distribution in 2023, highlighting embedded gains that could burden taxable investors. The ETF structure helps mitigate this through in-kind redemptions.

👉 Learn how tax-efficient ETF structures can boost after-tax returns.

Why Neuberger Berman Small-Mid Cap ETF (NBSM) Is a Strong Contender

Launched in March 2024, NBSM brings a proven separate account strategy—active since 1994—to the ETF format. Managed by Bob D’Alelio, Brett Reiner, and Greg Spiegel, the team applies a quality-focused framework to small- and mid-cap stocks.

Their criteria include:

Positions are built gradually and held long-term, reducing turnover and enhancing tax efficiency. With a target portfolio of 45–60 stocks, the fund prioritizes conviction over diversification.

Though NBSM is still growing its asset base, its sibling fund—Neuberger Berman Genesis—manages $15 billion and demonstrates the scalability of the strategy. Despite overlapping holdings, performance remains consistent: slightly lower beta means lagging in strong rallies but superior downside protection.

This makes NBSM ideal for investors seeking smoother returns in volatile small-cap markets.

Honorable Mentions: Promising Newcomers

Two major asset managers entered the ETF space late in 2024:

While we couldn’t complete full due diligence before publication, both firms run highly rated mutual funds using value-oriented, long-term strategies. Early analysis suggests these ETFs could become core holdings for value investors.

Also notable: iShares Bitcoin Trust (IBIT) continues to dominate digital asset flows, proving that trusted brands and low fees win in crypto investing.

The Worst New ETFs of 2024: High Risk, High Cost, Low Reward

Not all innovation benefits investors. Some new ETFs exploit behavioral biases—especially FOMO (fear of missing out)—by offering leveraged, speculative, or overly complex strategies that are likely to fail over time.

Two products stand out as particularly problematic:

Why MSTX Is a Risky Bet on a Risky Bet

MSTX is a leveraged play on MicroStrategy (MSTR)—a company that itself acts as a leveraged bitcoin proxy. MSTR finances bitcoin purchases through debt and equity offerings, creating inherent financial risk.

MSTX compounds this by using swaps to deliver 2x daily leverage on MSTR’s price. But problems arise due to:

  1. Structural inefficiencies: Swap counterparties have reached exposure limits, forcing the fund to use options—leading to inconsistent leverage (median: 1.77x instead of 2x).
  2. Volatility drag: Daily rebalancing leads to buying high and selling low in volatile markets.
  3. Poor leverage symmetry: On up days, average leverage was only 1.73x; on down days, it was 1.88x—amplifying losses more than gains.
  4. High fees: At 1.29% expense ratio, it’s over five times costlier than spot bitcoin ETFs.
  5. Valuation premium: MSTR trades at 2–3x the value of its bitcoin holdings—meaning investors pay significantly more per BTC.

With a standard deviation 17 times higher than the S&P 500, MSTX is likely to underperform over time—a fate shared by nearly half of all leveraged ETFs.

Why DIPS Offers Illusory Income

YieldMax’s DIPS ETF takes a complex approach:

This five-part options strategy aims to profit from NVDA’s decline while capping losses if it surges. But reality hasn’t matched theory.

Since its July launch:

Selling options generates income but caps upside and creates complex tax consequences. For most investors, simpler alternatives—like holding cash or diversified value funds—are more effective.

Honorable Mentions: Other High-Risk Launches

Frequently Asked Questions

Q: Are active ETFs better than passive ones?
A: Not inherently. Active ETFs can outperform if managed well, but most fail to beat their benchmarks after fees. Look for funds with experienced teams and proven processes.

Q: Why do so many new ETFs fail?
A: Low assets, high costs, or redundant strategies lead to closures. About one-third of all ETFs ever launched have shut down.

Q: Is leverage suitable for long-term investing?
A: No. Daily-reset leveraged ETFs suffer from volatility decay and are designed for short-term trading only.

Q: Can I trust new crypto-related ETFs?
A: Stick to regulated spot bitcoin or ether ETFs with low fees. Avoid leveraged or single-stock crypto plays.

Q: How do I evaluate a new ETF?
A: Examine its strategy, team track record, fees, liquidity, and underlying holdings. Avoid products that seem overly complex or marketing-driven.

Q: What makes an ETF tax-efficient?
A: In-kind creation/redemption minimizes capital gains distributions—a key advantage over mutual funds.

👉 See how leading ETF platforms support smarter investment decisions.