While exchange-traded funds have met with resounding success over the past three decades, the industry is facing a growing number of obstacles and may be headed for a slowdown, a recent study found.

ETF closures are catching up with launches, the report from Bloomberg Intelligence said, noting 58 funds have been liquidated in the last three months as launches have slowed. More closures are likely, according to the study from senior ETF analysts Athanasios Psarofagis and Eric Balchunas.

“We don't want to see products close,” Psarofagis said in an interview with etf.com. “It's actually a call we've been making for a while. We're not happy that we're right.”

The analysts say that 583 ETFs are at high risk of closure. The ETF universe was screened to select funds with less than $30 million in assets under management and again to select those funds that had negative returns since their inception. Even though some of those funds only launched in 2021, they could be doomed due to the dismal performance seen in 2022.

ETFs after 30 years are flirting with $7 trillion in AUM after pulling assets from mutual funds and growing to more than 3,000 funds. Still, the Bloomberg note projects that the average ETF life span will decline because so many of the funds that launched since 2021 have negative returns since their inception.

Psarofagis notes that many of those funds are so-called thematics, which were hit hard by the market downturn. Narrowly tailored thematic ETFs like The Generation Z ETF (ZGEN) and the Defiance Digital Revolution ETF (NFTZ) have already closed, and he’s not too optimistic about the prospects for funds like the KPOP & Korean Entertainment ETF (KPOP), which debuted in August last year and currently has less than $3 million in assets.

“They’re just too focused. It’s not the right environment for them,” he said. “I think we’re going to see a big purging of the lineups.”

At the start of 2023, one ETF closed for every three to four that launched. That worsened from last March, when one closed for every six to seven that opened. They say that trend might continue because launches often slow when markets are volatile.

Still, new issuers entering the market and products like single-stock ETFs could help maintain a steady pace for launches.

“I think at the end of the day, it’s going to be a good thing. I think it'll purge some of the stuff that was a little ‘fringy,’ and I think we'll be left with stronger, better, more well-thought-out products,” Psarofagis added. “I think it's important that products that are brought out are well thought out; they actually provide some sort of value to solving a problem.”