ETFs To Watch Now: 49 Up-and-comers Worth Your Attention

Twice a year, Morningstar’s analysts scan the fund landscape for emerging strategies that show real potential—and those ideas take shape in what we call the Prospects list.

We consider a variety of quantitative and qualitative factors when proposing candidates for the Prospects list, including management experience, uniqueness and durability of strategy, performance, and fees.

The final selection is finalized by a committee of our senior analysts. Strategies may graduate to full coverage or are removed if circumstances change. See the complete list here. 

There was a net change of +10 strategies. We added 19, graduated seven, and dropped two, resulting in a total of 49. 

Where we added: Heavy activity in allocation (retirement income/glide‑path innovation) and equities (surge in active ETF formats). 

Target-date managers are enhancing glide paths with stable value, annuities, and lifetime income options—aimed at sequence of returns risk and longevity risk.

Some of the newest allocation strategies to join the list include:

• BlackRock LifePath Paycheck aligns accumulation with an opt-in‑guaranteed income decision at retirement. 
• JPMorgan SmartRetirement Lifetime Income tracks SmartRetirement Blend but adds stable value starting 10 years pre-retirement, growing to 25% by retirement, plus opt-in lifetime income at retirement. 
• Nuveen Lifecycle Index Income begins with 95% equity and a small allocation to TIAA Secure Income Account that grows to 40% by retirement, when investors have the option to convert it into monthly payments.

You can dive deeper into the latest trends we’ve spotted in the target-date fund landscape, including fee trajectories and investor preferences, in our 2025 Target-Date Fund Landscape report.

Equity prospects skew toward quality‑tilted growth, concentrated active stock‑selection, and systematic approaches—often in ETF wrappers.

A few of the equity newcomers featured this cycle:

• Avantis U.S. Quality ETF AVUQ seeks stocks with strong profitability metrics and lower price/book ratios while maintaining exposure to mega‑caps. Apple and Nvidia each represented at least 10% of the ETF in early February 2026. 
• Eagle Capital Select Equity ETF EAGL is a concentrated portfolio of 25–35 stocks, value‑tilted, and mirrors a long‑running SMA. The managers take a patient approach, with the goal of holding stocks for at least three years.
• WisdomTree US Quality Growth ETF QGRW tracks 100 top quality and growth names from the largest 500 US stocks. Unlike many large-cap peers, it reaches down the market-cap ladder and includes some mid-cap names, broadening the fund’s reach.

Managers are pairing credit selection with systematic screens and multi‑sector breadth, plus tax‑sensitive vehicles for cash and muni sleeves.

Some of the fixed‑income additions highlighted in this edition:

• American Funds Multi‑Sector Income RMDUX has a competitive record since its public debut. Its R6 shares’ 5.1% annualized gain through December 2025 placed in the top quintile of distinct multisector bond peers and beat the Bloomberg US Aggregate Bond Index by 3.4 percentage points.
• iShares High Yield Systematic Bond ETF HYDB screens out the highest default‑probability issuers and overweights those with attractive default‑adjusted spreads. This ETF outpaced the category index by 65 basis points annualized between its 2017 inception and December 2025.
• Vanguard Core Tax‑Exempt Bond ETF VCRM primarily emphasizes investment-grade issues to generate tax-exempt income while maintaining liquidity across the curve.

The opt‑in annuitization features in BlackRock’s, JPMorgan’s, and Nuveen’s target‑date series offer advisors a framework to discuss longevity risk, income floors, and the trade‑offs of liquidity vs. guaranteed income. 

Each series specifies when income assets are built and at what target share at retirement (e.g. ~30% for BlackRock; ~25% stable value for JPMorgan; ~40% Secure Income for Nuveen), which helps align plan design with participant preferences. 

Quality tilts (Avantis, WisdomTree) can moderate risk in growth-heavy allocations, while concentrated active approaches (Eagle Capital, WCM, Alger) can serve as satellite sleeves for clients seeking potential alpha with known tracking‑error implications. The full investment prospect report’s details on fees arm advisors for cost-benefit discussions. 

When preparing to discuss with clients, you can use Morningstar's investment research tools to rank a fund's fees against its category to back up cost-benefit discussions.

Strategies such as iShares HY Systematic and American Funds Multi‑Sector Income show repeatable frameworks for balancing security selection with risk constraints—useful when setting client expectations on drawdown behavior and yield vs. quality trade‑offs. 

Tax‑aware options (e.g. Vanguard Core Tax‑Exempt, Alpha Architect 1–3 Month Box ETF for cash‑like exposure with tax‑efficiency intent) also provide tools to tailor after‑tax outcomes for high‑bracket clients. 

The Prospects methodology offers a due‑diligence framework that advisors can borrow for their own watchlists, documenting rationale, risks, and graduation or removal triggers. 

Here’s a look at our process, which you can find in more detail in the full report.

1. Generate ideas for prospects by monitoring regulatory filings, screening new funds, or researching individual managers.
2. Fundamental research on qualities such as size, especially strategies with smaller bases; track records, especially if a strategy is old enough to have a Morningstar Rating; and age, as funds younger than three years receive extra scrutiny due to short track records.
3. List composition focusing on funds with notable qualities such as a new manager, an experienced manager with a new fund, an under-the-radar manager, or a unique process.
4. Create strategy profiles for each fund with a summary of its key attributes and justification for inclusion on the list.
5. Conduct ongoing maintenance to remove funds if it has graduated to full analyst coverage; there has been a material change that lowers our confidence; it has closed to new investors; or new ideas are more compelling.

• ETF wrappers for active equity and derivative income strategies are growing—watch for fee competition and tax outcomes. 
• Retirement income features are proliferating in target date suites. Advisors should evaluate opt-in mechanics, annuity provider terms, and participant communications. 

Download the report here for our full commentary.