Core Insights - The U.S. ETF industry is experiencing rapid growth, with net inflows in 2025 surpassing the previous record of $1.2 trillion set in 2024, indicating a shift towards price-based segments with distinct product offerings and market leaders [1] Low-Cost Segment - The low-cost segment, defined as ETFs with net expense ratios of 0.25% and below, accounted for 79% of the U.S. ETF market by assets as of November 7, 2025, with the "Big 3" (Vanguard, BlackRock, State Street) holding an 82% combined market share [2] - Traditional beta ETFs, which provide market-cap weighted indexed exposure, make up 88% of the low-cost segment, with an asset-weighted fee of only 0.09% [3] - State Street announced a ticker change and fee cut for the SPDR Portfolio S&P 500 ETF (SPYM) on October 31, 2025, while Vanguard reduced expense ratios for 53 ETFs in February 2025 [3] Medium-Cost Segment - Active ETFs are increasingly displacing smart beta ETFs in the medium-cost segment (net expense ratios between 0.26% and 0.75%), highlighting a growing demand for active strategies [4] - BlackRock and State Street dominate this segment, but firms like Capital Group and JP Morgan are rapidly gaining market share with their active management strategies [5] - Actively managed dividend ETFs have seen significant inflows, contrasting with outflows from indexed dividend ETFs like SPDR S&P Dividend ETF (SDY) and iShares Select Dividend ETF (DVY) [6] High-Cost Segment - The high-cost segment is led by leveraged and buffer ETFs, with major players including ProShares, Direxion, and Innovator Management [7] - Leveraged and inverse ETFs account for nearly one-third of all high-cost ETFs by assets, while buffer ETFs have consistently attracted over $10 billion in net inflows annually since 2022 [9] Future Outlook - Over 40% of new ETFs launched in the U.S. in 2025 were in the high-price segment, including single-stock ETFs, although their success rate is generally low [11] - Vanguard and BlackRock may expand their presence in active ETFs, which could lead to fee compression in the medium-cost segment, benefiting investors with lower costs and more product options [10]

Core Insights - Sowell Management has partnered with Rayliant to enhance its OCIO platform with Rayliant's investment research and strategies focused on smart beta ETFs [2][4] - Jason Hsu, founder of Rayliant, will serve as the chief investment strategist at Sowell while continuing to lead Rayliant [3][5] - The partnership aims to provide unique, curated investment solutions for advisors, differentiating Sowell's offerings from competitors [4] Company Overview - Sowell Management is a registered investment advisor (RIA) based in North Little Rock, Arkansas, with $6 billion in assets under management (AUM) [2] - Rayliant specializes in developing asset allocation strategies using smart beta ETFs and has a history of partnering with advisors to enhance wealth management [5] Investment Strategies - Sowell's OCIO platform includes third-party portfolios managed by firms like Affinity Investment Advisors and Goldman Sachs, focusing primarily on ETFs and separately managed accounts (SMAs) [4] - Rayliant's ETF offerings include the Rayliant Quantamental Emerging Market ex-China ETF (RAYE), Rayliant Quantitative Emerging Market ETF (RAYD), Rayliant SMDAM Japan Equity ETF (RAYJ), and Rayliant-ChinaAMC Transformative Tech ETF (CNQQ) [4] Market Outlook - Hsu is optimistic about emerging markets, suggesting that the bargaining power of producers in these regions, particularly in Asia, will increase as more Americans retire [5]