ETF Market Trends & Innovation - ETFs are providing access to strategies previously unavailable to common investors, such as covered call and option premium strategies [2] - Explosive growth is seen in specific market segments like precious metals (gold) and cryptocurrencies (Bitcoin) [4] - Alternative assets, including precious metals and crypto, are increasingly being adopted into mainstream investment portfolios to diversify and find uncorrelated assets [6] - Product innovation is driven by new demand, with a focus on active ETFs and derivative strategies [8][9][12] - The industry has shifted towards active ETFs, with new entrants differentiating themselves through innovative product offerings [10][11][12] Fees & Performance - While passive ETFs have seen fee compression, active ETFs can support higher fees due to the increased workload [14][15] - Higher fees for active management put pressure on managers to deliver performance [15][16] - The ETF fees should be compared to other industries like structured notes or hedge funds, where similar profiles or payoffs may come at a higher cost (e g, 2 and 20 in hedge fund wrapper) [17] - There's increased tolerance for fee elasticity, especially if end-users can access high-octane active management [17] Due Diligence & Risk - Due diligence conversations have increased due to the complexity of new ETF products using options, leverage, and swaps [18] - Clients are interested in how these new alternative-based ETF products function within their overall portfolio and their risk-return profile [18] - Investors are seeking to understand the potential systemic risks associated with the rapid pace of ETF innovation and launches [19][20]