Active ETFs are revolutionising the global ETF industry, driving unparalleled growth in assets under management as they help investors access the benefits of active management through a liquid and cost-effective ETF structure.
Latest global ETF survey
Trackinsight released the fifth edition of its annual Global ETF Survey “50+ Charts on Worldwide ETF Trends” in February 2024. This edition, in collaboration with J.P. Morgan Asset Management and State Street, gathered insights from over 500 seasoned investors overseeing ETF assets exceeding US$900 billion.
While most global exchange-traded funds (ETFs) remain index-based, actively managed ETFs are blazing a trail in the industry, potentially elevating the overall industry to new heights by attracting billions of dollars’ worth of assets.
This is according to the recent 2024 Trackinsight Global ETF survey, which polled over 500 investors globally. The survey identifies top influential factors that have shaped the current ETF landscape and highlights emerging trends that are poised to unlock the industry’s next chapter.
Active ETF AUM is growing rapidly…
Assets under management (AUM) for active ETF strategies in North America and Europe, the two principle markets, soared to US$664 billion as at end-2023 – a more than 500% increase over five years since 2018. This has outpaced the growth in overall global ETF AUM which rose over 130% between 2018 and 2023, reaching US$11 trillion as at the end of last year.
…and demand remains strong
Nearly three quarters of ETF investors polled in the survey are currently investing in or are interested to invest in active ETFs. When asked if they plan to make any changes in the near term, over 70% of APAC respondents said they are looking to increase their exposures to active ETFs.
Why invest in active ETFs?
According to the Global ETF Survey 2024 by Trackinsight, investors typically tap into active ETF solutions to solve for a variety of investment challenges, a notable one being diversification.
The active ETF market has become as diverse as the active mutual fund market, presenting a wide array of strategies that cater to a range of investment needs. This has helped position active ETFs as a viable and important portfolio building block. Active ETFs span various asset classes and strategies, including research enhanced indexing, unconstrained, and thematic strategies.
Fixed income ETFs: the next chapter
Since the launch of the first bond ETF in Canada in 2000, the fixed income sector has witnessed extraordinary growth and evolution. More than two decades later, fixed income ETFs have become increasingly commonplace and continued to occupy a critical position in some investor portfolios.
The shift towards active fixed income solutions in an ETF structure seems to be a logical next step. While not as popular as their passive counterparts, active fixed income ETFs are starting to gain traction among investors. A key reason is that active fixed income ETFs have the flexibility to allocate to the most attractive bond issuers, based on rigorous bottom-up credit research. This is unlike passive ETFs that tend to closely track bond indices, and may not consider the quality of underlying companies.
Advancing the possibilities of ETF investing
Through active ETFs, investors can combine the benefits of active management – be it performance enhancement or income generation – with the well-known advantages of a highly liquid and cost-effective ETF structure.
Active ETFs are designed for dynamic markets. In the world of active ETFs, tap on the expertise of a leader in active management.