3 Great New ETFs From 2025

Key Concepts

• ETFs (Exchange Traded Funds): Investment funds traded on stock exchanges, offering diversification and liquidity.
• TIPS (Treasury Inflation-Protected Securities): Bonds indexed to inflation, protecting investors from purchasing power erosion.
• Basis Points: A unit equal to one-hundredth of one percent (0.01%), used to denote fees and expenses.
• Morningstar Medalist Rating: A qualitative rating system by Morningstar assessing fund quality based on process, people, parentage, performance, and price.
• Actively Managed ETF: An ETF where a portfolio manager makes investment decisions to outperform a benchmark.
• Passively Managed ETF: An ETF designed to replicate the performance of a specific index.
• Market Capitalization: The total value of a company's outstanding shares.
• Fundamental Indexing: A strategy that weights stocks based on fundamental factors like book value, sales, or dividends.

Vanguard Total Inflation Protected Securities ETF (VTP)

Vanguard Total Inflation Protected Securities ETF (VTP) is a passively managed ETF designed to capture the performance of the broad TIPS market. It charges an annual expense ratio of just five basis points, making it a cost-effective option for investors seeking inflation protection. The underlying index includes TIPS with at least one year remaining to maturity and a minimum outstanding face value of $300 million. Importantly, the index excludes TIPS held by the Federal Reserve to accurately reflect the amount available for public investment. This strategy isn’t new; the index has a nearly two-decade history, previously tracked by the iShares TIPS Bond ETF (TIP). However, VTP offers a significant cost advantage, being 13 basis points cheaper than TIP. This difference, while seemingly small, is particularly impactful in the low-risk, low-return environment of the TIPS market. The fund’s silver Morningstar Medalist rating reflects its straightforward, low-cost approach to capturing a broad market segment.

Capital Group High Yield Bond ETF (CGHY)

Capital Group High Yield Bond ETF (CGHY) is an actively managed ETF with an annual expense ratio of 39 basis points, also earning a silver Morningstar Medalist rating. While the ETF itself is recently launched, its investment strategy is rooted in the decades-long success of its sibling mutual fund, the American High Income Trust. A strategic shift in late 2020 for the mutual fund focused on the mid-quality segment of the high yield bond universe, and CGHY mirrors this approach. The fund is managed by the same team as the mutual fund, suggesting investors can anticipate similar performance. Capital Group’s deliberate entry into the ETF space, launching ETFs based on proven mutual fund strategies under the American Funds brand, increases the likelihood of CGHY’s success. The firm’s experience and established track record provide a strong foundation for this new ETF.

Rackqui US ETF (RA USU)

Rackqui US ETF (RA USU) is the newest of the three ETFs discussed, launched in September. Currently, it operates with a fee waiver, but is expected to charge 15 basis points annually once the waiver expires. This ETF represents Research Affiliates’ latest iteration in ETF offerings, building on decades of experience utilizing its investment strategies with various investors. While not a direct replication of Research Affiliates’ previous fundamentally weighted indexes (like the silver-rated Schwab Fundamental US Large Company ETF - FNDX), RA USU still prioritizes a stock’s fundamentals but weights holdings by market capitalization. FNDX, for comparison, leans more heavily into small-cap and value risk factors. RA USU aims to deliver returns closely aligned with the broader market, potentially with a slight emphasis on quality. The fund’s strategy leverages a well-established investment process, demonstrating that “new” doesn’t necessarily equate to “unproven.”

Connecting the ETFs & Overall Argument

The common thread linking these three ETFs is their reliance on established investment processes with proven track records in other investment vehicles – mutual funds or prior index iterations. The author argues that in a market flooded with new ETFs, many of which lack a demonstrable long-term merit, these three stand out due to their combination of competitive fees, reputable management, and sound investment methodologies. The author emphasizes that these ETFs aren’t revolutionary, but rather well-executed applications of existing, successful strategies within the ETF structure.

Data & Statistics

• VTP Expense Ratio: 5 basis points
• TIP Expense Ratio: 18 basis points (13 basis points higher than VTP)
• CGHY Expense Ratio: 39 basis points
• RA USU Expected Expense Ratio (post-waiver): 15 basis points
• Minimum TIPS Maturity: 1 year
• Minimum TIPS Face Value: $300 million

Notable Quote

“New does not have to mean unproven. Each of these ETFs come from firms with decades of experience running successful investment strategies.” – Author, highlighting the importance of established expertise in a crowded ETF market.

Conclusion

The core takeaway is that investors should prioritize ETFs with a proven foundation, even if they are newly launched. Vanguard’s VTP, Capital Group’s CGHY, and Research Affiliates’ RA USU represent compelling options due to their low costs, experienced management teams, and reliance on investment processes that have demonstrated success over time. In a market saturated with new ETFs, these three offer a degree of confidence and long-term investment merit that many others lack.