ETF Market Sees Surge in Crypto and Ex-China Offerings Amid Regulatory Scrutiny

ETF Market Sees Surge in Crypto and Ex-China Offerings Amid Regulatory Scrutiny

The exchange-traded fund (ETF) landscape is experiencing significant transformations, marked by the introduction of cryptocurrency-focused funds, emerging market ETFs excluding China, and heightened regulatory scrutiny over active management claims.

Trump Media Proposes ‘Truth Social Bitcoin ETF’

On June 3, 2025, Trump Media & Technology Group (TMTG), the entity behind the Truth Social platform, filed an application with the U.S. Securities and Exchange Commission (SEC) to launch the ‘Truth Social Bitcoin ETF.’ This proposed fund aims to provide direct exposure to Bitcoin and is set to be managed by Yorkville America Digital, with plans for listing on NYSE Arca. This initiative aligns with the recent surge in Bitcoin’s value, which has surpassed $100,000, and reflects the Trump administration’s favorable stance towards cryptocurrency regulation. Despite the enthusiasm, the ETF faces stiff competition from established players like BlackRock and Fidelity. Notably, Donald Trump, who once labeled Bitcoin a ‘scam,’ has become a vocal advocate for digital assets, emphasizing their strategic importance to TMTG’s operations. However, ETF expert Dave Nadig expressed skepticism about the long-term success of the Truth Social Bitcoin ETF due to intense market competition. Trump Media seeks to launch ‘Truth Social bitcoin ETF’

Vanguard Introduces Ex-China Emerging Markets ETF

In response to growing investor concerns over China’s geopolitical risks and market interventions, Vanguard Group announced plans to launch the ‘Vanguard Emerging Markets ex-China ETF.’ Scheduled for debut later in the summer of 2025, this fund aims to provide exposure to emerging markets while excluding Chinese investments. This move follows a trend of managing Chinese investments separately, especially after consecutive annual losses in China’s CSI300 index. The new ETF will charge a competitive 0.07% fee and is expected to offer substantial exposure to companies in Taiwan and India, which together constitute nearly 60% of the index. This development also comes after pressure from Missouri State Treasurer Vivek Malek, who urged Vanguard to create investment options that avoid Chinese stocks due to ongoing U.S.-China tensions. Vanguard files for new ex-China emerging markets ETF

Regulatory Scrutiny on ‘Active’ ETFs

Investment managers are facing criticism for promoting ETFs as actively managed while closely mirroring benchmark indices, a practice termed ‘shy active’ by Morningstar. A survey by Carne Group revealed that 88% of wealth managers and institutional investors believe these ETFs fail to meet their active management claims. Transparency concerns, especially due to European regulations mandating daily portfolio disclosures, have impeded the launch of genuinely active ETFs, as managers fear revealing proprietary trades. However, new semi-transparent structures introduced in Luxembourg and Ireland are expected to encourage truly active fund strategies by protecting trade confidentiality. Experts emphasize the importance of transparency and investor awareness about what such ETFs truly offer. Despite claims of misleading practices, some argue for the utility of low tracking error funds, provided their strategies and performance metrics are clearly disclosed. Investment managers accused of misleading market over ‘active’ ETFs

Capital Group Enters Active ETF Model Portfolio Market

Capital Group, the largest active asset manager globally, is entering the active ETF model portfolio market with eight model portfolios composed entirely of its own active ETFs. This move aligns with a growing trend where financial advisers prefer pre-constructed model portfolios to streamline their investment processes. These portfolios, which match specific risk levels or investment goals, are increasingly popular in the U.S. Capital Group’s new offerings leverage their 22 ETFs, which have garnered $53 billion in assets. By utilizing ETFs, advisers benefit from lower fees and increased tax efficiency compared to mutual funds. The model portfolio market, valued at $2 trillion in the U.S., is traditionally dominated by broker-dealers but is seeing a shift towards asset manager and third-party operated portfolios. The launch of Capital’s all-active ETF portfolios is seen as a response to the evolving financial advice ecosystem, where advisers focus more on comprehensive financial planning and outsource investment management. Capital Group wades into active ETF model portfolio market

Market Performance of Major ETFs

As of June 5, 2025, major ETFs have shown varied performance:

• SPDR S&P 500 ETF Trust (SPY): Trading at $595.71, a slight decrease of 0.00037% from the previous close.
• Vanguard S&P 500 ETF (VOO): Trading at $547.57, down 0.00015% from the previous close.
• Invesco QQQ Trust Series 1 (QQQ): Trading at $527.68, a decrease of 0.00206% from the previous close.
• iShares Russell 2000 ETF (IWM): Trading at $209.20, up 0.00365% from the previous close.
• SPDR Dow Jones Industrial Average ETF (DIA): Trading at $425.72, an increase of 0.00184% from the previous close.

These figures reflect the dynamic nature of the ETF market, influenced by various economic indicators and investor sentiments.

Conclusion

The ETF market is undergoing significant changes, with the introduction of cryptocurrency-focused funds, ex-China emerging market options, and increased regulatory attention on active management claims. Investors are advised to stay informed about these developments to make strategic investment decisions.