There's a classic scene in The Wolf of Wall Street where Jordan Belfort explains that nobody knows if a stock is going up or down — what matters is the commission. Swap "stock" for "thematic ETF" and you've got the perfect portrait of what's happening right now in the American index fund market.
The copycat party is winding down. And it's not just me saying it.
The guy who makes a living off ETFs admitting: not everything belongs in an ETF
Mike Akins, founder of ETF Action — a guy who literally pays his bills through the ETF ecosystem — went on CNBC this week and dropped an inconvenient truth:
"The ETF wrapper is more efficient for a lot of things. Not for everything."
Read that again. The guy who's "ETF first" is saying that shoving everything inside an ETF — including private assets, exotic options strategies, covered calls of every flavor and color — makes zero sense in many cases.
This, my friends, is what Taleb would call skin in the game speaking louder than marketing. When the person selling the product admits the product has limits, pay attention.
The flood of thematic garbage
Here's what happened over the past few years: it became ridiculously easy to launch an ETF. Akins himself confirmed it: "The ability to bring an ETF to market has gone mainstream. It's super easy if you have the right partner."
And when something gets too easy, quality goes down the drain. It's the Law of Financial Gravity.
The result? A flood of copycat ETFs — covered call funds, buffer strategies, "protection" ETFs that are basically the same crap with a different label. Dozens of asset managers launched nearly identical products chasing the same investor, the same theme, the same narrative.
It's like everybody opening a gourmet burger joint on the same block. At first, it looks like there's room for everyone. Then reality shows up with the subtlety of a garbage truck.
"You can't have that many strategies tracking the same point," Akins said, point blank.
The consolidation that's coming — and who's going to get burned
Akins predicts serious consolidation in "non-traditional" ETF strategies by the end of 2026. In plain English: a lot of these funds are going to shrivel up, bleed assets, and eventually shut down.
The winners will be few. The losers, many.
And here's the part that should keep anyone who invests in these niche products without thinking twice up at night: the responsibility changes hands. When you buy an ultra-specific thematic fund — industrial reshoring, infrastructure, whatever the flavor of the month is — the burden of timing shifts from the manager and lands squarely in your lap.
"If you're investing in niche strategies, your success stops depending on the manager and starts depending on your ability to use the product at the right time," Akins explained. "The responsibility is yours."
Damn, that's important. The investor buying a thematic ETF thinking it's the same thing as buying an S&P 500 index fund is playing with fire. Niche ETFs require a thesis, timing, and most importantly, the humility to know when to get out.
The artificial intelligence nobody's seeing
While everyone was getting hyped about ETFs about artificial intelligence, the real revolution has been happening quietly: ETFs managed by artificial intelligence.
Aga Kuplinska, from Tidal Financial Group, confirmed that products already exist on their platform that are "AI-enhanced" or "AI-managed" — and that this is just the tip of the iceberg.
Catch the irony? The market spent two years packaging AI company stocks into thematic ETFs while the truly disruptive use of the technology is in the investment process, not the fund's theme.
It's as if, during the gold rush, everyone was selling shovels with a "GOLD" sticker on them — and nobody thought about actually using the shovel to dig.
The takeaway
The ETF market isn't going to stop innovating. That's a fact. But innovation without standards is just noise. And noise, in the financial markets, usually means someone is trying to sell you something you don't need.
Next time you see a shiny new ETF promising exposure to the "mega trend" of the moment, ask yourself the question Akins posed on national television: by the time the theme hits the market, hasn't the trade already played out?
If the answer makes you uncomfortable, maybe that's exactly the signal you needed.
