challenges and opportunities in the etf market

​At this year's FundForum in Monaco, Elston Consulting's Portfolio Strategist, Andrea Acimovic, joined panellists from TrinityBridge, Evelyn Partners and Morningstar to discuss one of the defining trends in asset management: the extraordinary growth of ETFs and the structural challenges emerging alongside it.

The discussion explored how the ETF industry has transformed investing over the past two decades by democratising access to markets, asset classes and investment strategies that were once difficult or expensive to access. Today, investors can build globally diversified portfolios more efficiently than ever before.
However, as Andrea highlighted during the session, the challenge has shifted. The problem is no longer access - it's selection.
With more ETF launches than ever before, and in some markets more ETF tickers than listed stocks, investors have unprecedented choice. While that innovation is overwhelmingly positive, it also creates a significantly greater due diligence burden. Building portfolios has become easier; building good portfolios has arguably become harder.
Another key theme was the distinction between access and diversification. Different ETFs can often provide exposure to many of the same underlying companies or factors, meaning portfolios that appear diversified on the surface may still contain significant hidden concentrations. As Andrea noted during the discussion, the ETF wrapper itself is not the risk - the concentration inside the wrapper can be.
The panel also explored how ETF innovation is evolving beyond traditional passive strategies to include active ETFs, options-based products, defined outcome strategies and private market exposure. While these developments continue to broaden the investment toolkit, they also raise an important challenge for investors and advisers alike.
One of Andrea's key observations was that "innovation is moving faster than investor education." As investment products become increasingly sophisticated, understanding how they behave within a portfolio is becoming just as important as accessing them in the first place. The focus for selectors is no longer simply identifying the newest ETF, but determining whether it genuinely improves portfolio outcomes.
The discussion concluded that the next phase of ETF growth is unlikely to be defined by the number of new products launched, but by the quality of implementation. As the ETF universe continues to expand, robust due diligence, thoughtful portfolio construction and a deeper understanding of underlying exposures will remain central to delivering better long-term investment outcomes.