Ben Felix called it “ETF slop.” Dan Hallett agreed. Both are right — but the column stops short. Slop is messy for advisors. For investors, it can be costly.
The ETF earned its reputation by being simple, cheap and safe. Manufacturers have been exploiting that assumption ever since. And the investors least equipped to notice are the ones with nobody to tell them. Nearly half of ETF investors under 35 buy through discount platforms — no advisor, no suitability check. They are choosing on fees and recent returns. Those are the two metrics most visible on a screen and the two that tell you nothing about how a product fails when markets turn.
And markets do turn. When they did in early 2020, the Ontario Securities Commission found that the ETFs that cracked first were exactly the complex, thinly traded strategies now multiplying fastest. The warning went unheeded.
The industry answered with 246 new ETF launches in Canada in 2025 alone — knowing full well that roughly 30% typically fail. Despite the dried spaghetti already clinging to the wall, the launches continue unabated.
In June 2025, the Canadian Securities Administrators published a consultation paper acknowledging that mutual fund rules — never designed for today’s ETF market — were being stretched beyond their limits. It was a candid admission. It was also the beginning of a process that will take years to produce enforceable rules. The launches continued. The spaghetti kept coming.
The industry honesty is welcome. The regulatory response is not. These products are being approved under rules that were never designed to govern them, and sold through channels that were never equipped to explain them. That combination has a price. It won’t be paid by the manufacturers. It won’t be paid by the regulators. Investors will pay it. They always do.