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By Suzanne McGee (Reuters) -The U.S. exchange-traded fund market is churning out new products at an unprecedented clip, creating concerns about a bubble developing – causing some investors to become more selective about which funds to support and question how many can survive. The ETF industry has exploded in size in response to regulatory changes in 2019 that allowed actively managed funds and those using derivatives to roll out new products more swiftly, while a recent regulatory decision to approve the creation of an ETF share class is likely to generate a fresh wave of products. But that rapid growth has prompted caution from some in the industry about supporting all of these new ETFs.    "We're certainly at an unsustainable level of launches, and we're going to have to start seeing product rationalization and closures," said Drew Pettit, U.S. equity strategist at Citigroup, who said the product class could be heading toward a bubble.  The explosion of product has encouraged asset managers to come up with new offerings that push the limits of what the SEC has been willing to approve in the past. Over the last ten days, a group of asset managers that specialize in offering leveraged ETFs tied to individual stocks have filed with the Securities and Exchange Commission to issue leveraged funds seeking to provide three times and even five times daily upside of a handful of individual stocks. Risk guidelines laid down by the SEC in late 2020 under then-chairman Jay Clayton had capped leverage at two times. The SEC itself on Thursday said it is "unclear" whether the new filings will be approved. Ryan Sullivan, head of buy-side Americas at FTSE Russell, an index provider, who has spent some 20 years in the ETF arena, said that financial advisers were now getting more picky about which ETFs to advise clients to buy.  "Operationally, it has never been easier to launch a new ETF, but the flip side is that having a successful launch is only getting more difficult," he said.   For most of those two decades he has worked on ETF products, he said, an ETF with $50 million to $100 million in assets typically would be on the radar screen of most financial advisers. "Now they're saying: 'Don't call me until you have the first $200 million or so'," Sullivan said. Whether the ETF industry can sustain its current torrid growth rate also relies on the market-makers, trading firms such as Citadel Securities and Jane Street Capital that buy or sell throughout the day to help ensure tight trading spreads. "Market-makers are already raising the caution flag, saying that they need to be pickier about the funds that they support because they only have so much time," said Gavin Filmore, chief revenue officer of Tidal Investment Group, an ETF issuer that works with asset managers to launch new funds.  Senior executives working for three different ETF service providers, none of whom were willing to speak on the record, citing client confidentiality, are adamant that the ETF industry does not face a capacity crunch, but they acknowledge that rapid growth creates challenges.  There is more "selectivity," said Cory Laing, managing director of Citadel Securities Institutional Equity.  Jane Street Capital, another large marketmaking firm, did not return calls seeking comment. LAUNCH TSUNAMI  Concerns are growing about the sheer number and size of products being launched in the $13 trillion U.S. market. In the first nine months of 2025, some 794 new ETFs made their debut, topping the 746 launches recorded for the whole of 2024, which itself marked a fresh record. Asset managers are on pace to roll out more than 1,000 new products in the U.S. before the end of the year. On Monday, the flow of new investor dollars into U.S. ETFs year-to-date topped $1 trillion, a milestone that took until December to reach in 2024. Matthew Bartolini, global head of research strategists at State Street Investment Management, said flows for 2025 as a whole almost certainly will smash last year's record of $1.1 trillion and could reach as high as $1.4 trillion. So far, there is little incentive for asset managers to ease up on the pace of ETF launches. Many are trying to launch model portfolios and need new ETFs to fill in some gaps. "And then, if someone has a good idea and it works, you have at least 20 copycat ETFs," said Greg Stumm, CEO of American Beacon Partners, a distribution platform for ETFs. The launches are raising concerns for Dan Sotiroff, an analyst at Morningstar.  "There are all these leveraged single-stock ETFs, and then people are adding options to those to generate income," Sotiroff said. One frequently cited source of concern by ETF industry analysts is the leveraged single-stock ETFs, which have exploded in number. In a report published on Sunday, JPMorgan equity derivatives analysts calculated that selling related to these products contributed to the market selloff last Friday. Still, others believe there are more than enough investment dollars to absorb the product. Sean O'Hara, CEO of Pacer ETFs, said his firm forges ahead with only 10% to 25% of the new product ideas it considers, and is impatient with those who fret that the ETF market is in a bubble just because there are now more ETFs than publicly traded stocks.  "After all, there are more words than there are letters in the alphabet," he points out. (Reporting by Suzanne McGee in Rhode Island; Editing by Megan Davies and Matthew Lewis)

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(Reuters) -SLB beat Wall Street estimates for third-quarter profit on Friday, helped by higher-than-expected demand for its oilfield equipment and services in North America. The company reported an adjusted profit of 69 cents per share for the quarter ended September 30, compared with analysts' estimate of 66 cents, according to data compiled by LSEG. (Reporting by Tanay Dhumal in Bengaluru; Editing by Anil D'Silva)

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(Reuters) -Jefferies' fund caught up in the collapse of auto parts maker First Brands is separate from its investment banking business, its top executives said at the bank's investor day. "The Point Bonita fund in asset management sits absolutely separate, distinct and apart from whatever happens in investment banking. Kind of Chinese Wall 101," Jefferies President Brian Friedman said at the event held on Thursday. "The two have absolutely no relationship and, in fact the decision in 2019 of the asset management Point Bonita team to engage with First Brands, was absolutely away from independent and disconnected from anything on the investment banking side," he said, according a regulatory filing released on Friday. The collapse of First Brands, just days after subprime lender and dealership Tricolor went belly up, has unsettled Wall Street's multitrillion-dollar credit market. "I'll just say this is us personally, we believe we were defrauded," Jefferies CEO Rich Handler said, adding that despite this the environment remains generally good. "I'm not saying there aren't other issues like this. There was one yesterday that one of our competitors had to deal with. I think there's a fight going on right now between the banks and direct lenders who each want to point fingers at each other and say, it's your fault, no, it's your fault." U.S. regional bank stocks fell on Thursday after Zions Bancorporation disclosed it would take a $50 million charge-off in the third quarter. Western Alliance also alleged fraud against a borrower and disclosed it had initiated a lawsuit. Jefferies' stock slumped after First Brands disclosed more than $10 billion in liabilities in bankruptcy protection filing in late September. Earlier this month, the investment bank said its exposure to First Brands is limited and any potential loss would be "readily absorbable". The bank called the share reaction overdone while disclosing that its Leucadia Asset Management fund holds about $715 million in receivables linked to First Brands. (Reporting by Manya Saini in Bengaluru; Editing by Arun Koyyur)

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