ETFs In 2025: Fee Wars, Crypto Booms, And The Risks Ahead

The ETF market is never dull, and 2025 promises to be no exception.

In a podcast discussion on Bloomberg, The ETF Store, Inc. President Nate Geraci, along with Bloomberg’s Eric Balchunas and Vilna Hyek shared their thoughts on what lies ahead. Here's a look at the predictions shaping the conversation.

First up: A fee war. Geraci believes we're about to see some serious competition among the biggest S&P 500 ETFs. Vanguard S&P 500 ETF VOO and iShares Core S&P 500 ETF IVV are duking it out to become the market favorite.

With fees already thin at 0.02% and 0.03% respectively, any further cuts could make headlines. "It's about capturing that top spot," said Geraci. Vanguard has a history of passing cost savings to investors as funds grow. It's a win for consumers, but it could squeeze margins for providers.

Also See: EXCLUSIVE: Direxion CEO Predicts Crypto, Commodities Will Take Center Stage Amid Volatility In 2025

Coming to the second prediction, Geraci is optimistic that 2025 will bring a wave of approvals for spot Bitcoin and Ethereum ETFs, along with some altcoin-focused funds. Why now? The regulatory environment looks set to become more crypto-friendly, especially with potential leadership changes at the U.S. Securities and Exchange Commission.

If Geraci is right, expect a flood of new options for investors looking to ride the crypto wave through ETFs.

Not every innovation, however, is a perfect fit for ETFs. Take private credit ETFs, for instance. While they sound intriguing, Geraci is skeptical. The biggest issue? Private credit is illiquid, and ETFs promise daily liquidity. Throw in potential conflicts of interest — like fund managers acting as both liquidity providers and valuation sources — and it's a recipe for disaster. "The structure just doesn't match the asset," he warned.

Tax efficiency is another trend that's gaining traction. Among those gaining popularity are structures like 351 exchanges, which let investors contribute stocks whose prices have appreciated, to an ETF, without triggering capital gains taxes. These setups aren't just about saving money — they also make ETFs a smarter tool for long-term planning.

Of course, the conversation wouldn't be complete without a word of caution. Leveraged single-stock ETFs have been grabbing attention, but they carry significant risks. Geraci is blunt about it: "It's only a matter of time before one of these implodes." Leveraged ETFs built around sensitive stocks are one sharp dip away from falling off the cliff.

So, what does all this mean for 2025? It's clear that the ETF market is evolving rapidly, with innovation and competition driving the next phase of growth. But as always, investors should keep an eye on the risks. As Geraci put it, "These aren't just investment calls — they're predictions about the forces reshaping the ETF industry."

Here's hoping 2025 lives up to the hype.

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