🧠 ETFs: Gotta catch 'em all?

Not all ETFs are Pokémon worth collecting. Here's how to choose

Author

Nessrine Slimani
February 26, 2026

In 2025, nearly 2,800 new ETFs were launched worldwide.
But does having more choice necessarily mean a good thing? Not so sure.

The word ETF now covers products that have little in common with what we usually think of: simple index funds, well diversified, with low fees.

Today, to help you stay informed and aware, we'll explore these questions:

  • What's the point of an active ETF compared to index ETFs?

  • What criteria should you pay attention to when comparing ETFs?

  • How can you combine a boring but effective strategy with options that reflect your beliefs but carry more risk?

Let's dive in.

Active ETFs vs Index ETFs: two promises

For twenty years, ETF was associated with a fund that tracks a stock market index.

The structure of an ETF requires transparency because the fund provider must publish its holdings every day so the market can set the right price. This works fine when tracking an index (everyone knows which companies make up the most popular stock indices), but it was incompatible with active management because no fund manager wanted to reveal their strategy in real-time to competitors.

From 2019, US regulators and European ones relaxed the rules, which led to new types of ETFs.

That's why we now have two families:

  • On one side, index ETFs (passive) that aim to track a market's performance based on the index they follow.

  • On the other, active ETFs - in the broad sense - where managers actively select holdings based on their own strategies, such as expressing a belief (AI, renewable energy, ageing population).

How to choose between Passive and Active?

If you're torn between the safety of a diversified portfolio and the desire to express beliefs about certain sectors, there's an approach that lets you do both: core-satellite.

This approach means keeping most of your portfolio (around 80%) in diversified passive management, that's your "core", your solid base. And you set aside a smaller portion (around 20% or less) to invest according to your values or beliefs, these are your "satellites".

The main advantage is that you "protect" the essential part whilst personalising a portion of your portfolio.

Note: This “protection” works over the long term (15-20 years) and assumes international diversification (according to this FMA study, even 20 years isn't enough to remove risk if you focus on just one market like France).

The main drawback is that you have more decisions to make (Which satellites to choose? When to rebalance?) plus the fees that add up and of course the risk of getting a satellite wrong.

100% passive is perfectly fine too.

It all depends on your goals, your profile and your beliefs.

What Criteria Should You Use to Choose Active ETFs?

If you go for the satellite approach, here are the criteria worth your attention when choosing active funds.

1. The fund's exact strategy

Don't rely only on the name, which can mean 10 different things depending on the provider.

For example, with two "artificial intelligence" funds, the first might select 30 companies that develop chips, whilst the second selects 200 companies that use AI in their operations (from Microsoft to Carrefour).

The best place to find an explanation of the fund's strategy is the provider's website (Amundi, BNP Paribas, Wisdom Tree, DWS, etc.)

You'll find required information like the prospectus or the ETF fact sheet with details about the exact method:

  • What are the selection criteria?

  • How many companies are in the fund?

  • Which sectors are selected?

  • Which geographical area?

Five minutes of reading that can help you avoid nasty surprises.

2. Performance history

An ETF that's been around for 10 years gives you a complete picture: how it behaved during crises, recoveries, turbulence.

This helps you better understand its long-term performance when markets are under pressure, or whether the strategy only works in a specific context.

An active ETF launched a year ago doesn't give you this information.

It's a bet on a strategy that hasn't yet proved itself in all market conditions. Again, it's a question of profile: some people won't hesitate to invest in new products that haven't yet proved themselves if they match their beliefs.

3. Annual management fees

I go on about this so much it shouldn't be a surprise, but a broad index ETF costs between 0.05% and 0.40% per year, whilst an active or thematic ETF is usually around 0.40% to 0.80%.

Why does this matter? Because you pay these management fees every year, whether there are gains or losses, and they're automatically taken from your performance.

If you're paying 0.60% instead of 0.15% without a strong reason, you're losing performance for nothing.

Higher fees can be justified if the active ETF brings you real added value: a specific strategy, alignment with your beliefs, or unique exposure.

4. Fund size

Final point: an ETF with less than €100 million in assets risks closing if the provider decides it's not profitable to maintain given the low demand.

You'll get your money back, but this forces you to reinvest elsewhere and may trigger tax depending on your investment account type.

Choosing well-established ETFs (minimum €100 million in assets) makes your life easier in the long run.

Final Word

Nearly 2,800 new ETFs were launched in 2025, but you don't need to chase the latest releases to invest well.

A portfolio with two or three broad, diversified index ETFs does the job for most people, and you can express beliefs through satellites whilst protecting most of your savings.

As usual, what matters is understanding what you're buying, checking that the strategy matches your goals, and making sure the fees are justified.

ETFs aren't Pokémon, you don't need to catch them all 🙂 

Take care,
Nessrine

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Articles, research and studies consulted for this edition:

Important reminder: This content is educational only, not investment advice. Make sure to do your own research before getting started. And remember that all investments, ETFs included, carry risks of capital loss.

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