On this week’s episode of ETF Prime, Cinthia Murphy, investment strategist at TMX VettaFi, joins host Nate Geraci to discuss ETF flows in the first half of 2025, new ETF innovations and more. Next, Joel Schneider, deputy head of portfolio management at Dimensional, discusses the firm’s milestones, approach to investing and multi-share class structure.

According to Cinthia Murphy, the days of simple, traditional ETF structures are largely over.

Murphy emphasizes how the space is growing more sophisticated and investor needs are shifting in response. Her key takeaways touched on product complexity, fund flows, options-based strategies, and innovation in ETF design.

ETF Flows Remain Resilient in 2025

Despite earlier caution around macro conditions, ETF flows have been strong year-to-date, already exceeding $560 billion. Murphy pointed to several areas attracting investor capital such as Core S&P 500 exposure (e.g., Vanguard S&P 500 ETF (VOO)), international equities, treasury bills, gold and Bitcoin ETFs, and derivative income ETFs.

Murphy mentioned how options-based ETFs like the JPMorgan Equity Premium Income Fund (JEPI) and JPMorgan NASDAQ Equity Premium Income ETF (JEPQ) continue to lead in popularity, driven by investor demand for enhanced yield and equity participation.

New Frontier With Options-Based & Defined Outcome ETFs

Murphy described the rise of options-based ETFs as a “democratization of advanced investment strategies.” These funds give everyday investors access to tools that were once reserved for institutions.

“I think it’s been a really interesting movement to diversify that classic 60/40 [portfolio], with other ways to have equity exposure and generate income through different paths,” said Murphy.

Murphy also highlighted next-generation ETF structures that are redefining investor expectations. These include ARK’s “defined innovation” ETFs, which aim to offer upside exposure with downside protection. Other funds mentioned include ProShares’ dynamic buffer ETFs featuring daily reset mechanics and Innovator’s dual directional buffer ETFs designed to capture market moves in both directions, but offering positive returns when the underlying asset declines.

Joel Schneider on Dimensional’s ETF Growth

Joel Schneider joined the podcast to discuss Dimensional’s rapid rise in the ETF space, highlighting its milestone of surpassing $200 billion in actively managed ETF assets. This feat makes it the fastest-growing suite in the industry.

“Flows are accelerating,” he noted, with over $20 billion in net new flows in the first half of 2025 alone. According to Schneider, Dimensional is drawing attention from a wide range of investors, from RIAs to institutions.

Challenging Traditional Indexing

Schneider emphasized that Dimensional’s approach is about systematic investing without trying to outguess markets. He challenged the notion that index funds are neutral benchmarks, pointing to hidden costs like mechanical trading and inefficient rebalancing.

“Indexes aren’t as passive as people think,” he said. “They can cause big trading spikes and force funds to buy high and sell low.” He also encouraged advisors to look beyond the fees and consider the total cost of ownership. This includes tax efficiency and securities lending practices, noting tax savings of up to 19.5 basis points in some cases.

Push for Multi-Share Class ETFs

Finally, Schneider mentioned Dimensional’s leadership in advocating for mutual fund and ETF share class conversions. He calls it a “paradigm shift” that could give investors more choice and efficiency and is optimistic about SEC approval later this year.

“These products reflect the industry’s broader push to offer sophisticated, flexible solutions that meet investors where they are,” he said.