Core Insights - Demand for exchange-traded funds (ETFs) is increasing as investors seek cost-effective and tax-efficient investment options, with $540 billion in new inflows in the first half of 2025, surpassing the same period in 2024 [1] - A total of 464 new ETFs were launched by June 2025, potentially exceeding the 2024 record of over 700 [1] Investment Considerations - Investors often mistakenly assume all ETFs are similar without examining the underlying assets, which can lead to purchasing narrow and risky funds instead of diversified options [3][4] - Common pitfalls include "chasing performance" based on past returns, which may not be indicative of future results, and rushing into trending ETFs without proper analysis [5][6] Trading Behavior - Frequent trading of ETFs can erode returns, as many investors treat them as short-term trading vehicles rather than long-term investments [7] - A Morningstar report indicates that over the past decade, investors in U.S. open-end funds and ETFs underperformed due to poorly timed trades, with an average return of 7% compared to the funds' 8.2% aggregate annual total return, resulting in a 1.2 percentage point "investor return gap" [8]