ETFs have long been considered the epitome of simple and inexpensive investments. With a single exchange-traded index fund, investors can spread their money across hundreds or even thousands of companies - all at very low fees.
But the ETF world is changing rapidly. In addition to classic index funds, there are now more and more products with sophisticated investment strategies, active fund management or leverage. The choice is growing, but so is the complexity and sometimes the costs.
Thousands of products to choose from
“If we think back: the first ETFs on the market were index ETFs, ETFs on the DAX or the Eurostoxx 50. These were actually simple products,” says Ali Maserwah from the fund analysis house Envestor in an interview with the ARD finance editorial team. “That has definitely changed.”
This makes it increasingly difficult for investors to keep track of things. There are now more than 3,000 ETFs to choose from in this country - almost twice as many as six years ago. According to a survey by the money guide Finanztip, more than one in five respondents who are familiar with ETFs believe the products are difficult to compare.
The spectrum ranges from thematic ETFs, which focus specifically on investment trends such as artificial intelligence or armaments, to so-called smart beta or factor ETFs, in which stocks are selected and weighted according to certain criteria. There are also leveraged ETFs, which can multiply daily price movements and therefore both profits and losses.
Active ETFs on the rise
The range of actively managed ETFs is currently growing particularly rapidly. Unlike classic index funds, which replicate a stock market index such as the MSCI World as closely as possible, they pursue their own investment strategy. A fund manager decides which stocks or bonds to buy and how heavily they are weighted - or the selection is made using computer-aided models. The aim is often to achieve a higher return than the benchmark index or to limit certain risks.
This makes active ETFs similar to conventional actively managed investment funds. However, they are traded on the stock exchange - and are usually cheaper than classic investment funds.
Europe lags behind the USA when it comes to active ETFs
Figures from Morningstar show how heavily providers are now relying on these products: in the first eight months of 2026, 23 percent of all newly launched ETFs in Europe were already actively managed. In 2022 it was only 3.2 percent. Assets under management are also growing rapidly. According to Morningstar, it has increased almost fivefold since the end of 2022 and reached around 123 billion euros at the end of August 2026.
Nevertheless, active ETFs remain a comparatively small market segment in Europe: they account for just 3.8 percent of total ETF assets. In the USA this share is already around 13 percent.
How expensive are active and specialized ETFs?
However, the growing diversity comes at a price. While competition continues to drive down the fees for classic index funds, many specialized ETFs cost significantly more. “Investors pay 0.6 or 0.7 percent for complex ETFs – sometimes even more,” says investment expert Maserwah. This refers to the annual running costs, measured based on the invested assets.
However, not all new ETF strategies are equally expensive. According to a Morningstar evaluation, actively managed stock ETFs cost an average of 0.37 percent per year in Europe as of August 2025. This is more than passive stock ETFs with an average of 0.27 percent, but significantly less than classic active stock funds, which paid an average of 1.32 percent.
Many classic index funds are now available significantly cheaper: ETFs on broad world stock indices such as the MSCI World or the DAX are already available for annual fees of 0.1 percent or less.
Higher fees reduce returns
What initially sounds like small differences can add up significantly over the years. For example, if you invest 20,000 euros for 20 years and achieve an annual return of 6.0 percent before costs, you will earn around 62,900 euros with ETF fees of 0.1 percent. With annual costs of 0.7 percent, it would only be around 56,100 euros - around 6,800 euros less.
A more expensive ETF can compensate for this disadvantage with better performance. However, in the long term he must achieve a correspondingly higher return before costs. Whether this will succeed is by no means certain.
What risks do complex ETFs pose?
With active ETFs, better performance than the benchmark index is by no means guaranteed. Studies show that even professional fund managers often fail to beat the market in the long term. Smart beta or factor ETFs can also perform worse than classic index funds over a longer period of time.
There are further pitfalls lurking with theme ETFs: These often only invest in a limited number of companies - and timing also often becomes a problem. “Many theme ETFs only come onto the market when everyone has already recognized that this is now an investment theme. The prices are then already very far ahead,” emphasizes investment expert Maserwah.
ETF doesn't have to mean easy and cheap
ETFs are also enjoying growing popularity in Germany. Around 4.7 million people in this country owned an exchange-traded fund in 2025 - almost twice as many as in 2022. However, the triumph of ETFs has created a new problem: the choice is becoming increasingly difficult for a product that has become known for its simplicity.
The classic, cheap index funds still exist. But the growing variety of products makes it increasingly important for investors to take a closer look: What is actually in an ETF, what risks does the strategy involve and how high are the costs? The fact that an ETF is on a product no longer automatically means that investing is particularly easy or particularly cheap.
