Core Viewpoint - The ETF industry, valued at $11 trillion, is transitioning from a focus on ultra-low fees and passive management to higher-fee active management strategies, aiming to improve profitability and escape the revenue drought experienced in recent years [2][3]. Group 1: ETF vs. Mutual Funds - The U.S. mutual fund market, with a size of $19 trillion, primarily employs active management and generated approximately $82 billion in management fee revenue last year, significantly surpassing the $17 billion revenue of ETFs [3]. - Active mutual funds generate five times the revenue of ETFs, despite having slightly less than double the asset size of ETFs, highlighting the potential for revenue growth in the ETF sector [3]. Group 2: Revenue Disparity in ETFs - There is a significant imbalance between asset allocation and revenue contribution within the ETF industry; ETFs with fees below 10 basis points account for 60% of total ETF assets but only 16% of industry revenue, while those with fees above 50 basis points represent 6% of assets but contribute 28% of revenue [5]. - The inflow of funds into low-fee ETFs remains strong, but growth is beginning to slow, indicating a willingness among investors to pay more for specialized or differentiated investments [6]. Group 3: Future Trends in ETF Fees - The average fee for ETFs launched in 2025 has risen to 65 basis points, the highest level in history, reflecting a shift towards higher-margin products as the ETF market matures [6]. - Despite the popularity of ETFs, their revenue remains far below that of mutual funds, suggesting significant untapped revenue potential within the ETF industry [6]. - The top five ETF issuers have an average fee of only 22 basis points, while other issuers average 64 basis points, indicating a trend towards higher fees among smaller issuers as the market evolves [6].