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According to Morningstar Direct, about 60% of the nearly 500 ETFs launched in the US in 2021 are actively managed. Data as of December 15 shows that this is the first year that more active ETFs have been launched than index-tracking ETFs.
These include the debut of ETFs from management companies such as Putnam Investments, Harbor Funds, Alger and Gabelli, and the first active ETFs from Nuveen and Bank of New York Mellon. It also includes the first batch of active mutual funds converted into ETFs, including six funds from Dimensional Fund Advisors. JP Morgan Asset Management and Franklin Templeton also plan to switch products in 2022.
The new product seems to take advantage of what seems to be accelerating investor interest in the stock and bond selection strategies in the ETF package. According to Morningstar Direct, the US$84.1 billion invested by investors in active ETFs between 2021 and November is nearly 50% higher than the record of US$57.4 billion for the whole of last year.
Despite receiving more and more attention and assets, active strategies still play only a small role in the US$7 trillion ETF industry. According to Morningstar’s data, as of November 30, they accounted for only 10.5% of net sales and 4% of assets.
Leveraging market share under the control of ordinary index funds may prove to be a daunting task. CFRA ETF research director Todd Rosenbluth (Todd Rosenbluth) said: “The funds flowing into the ETF field have been looking for extremely low-cost, diversified products, but will not be active again.” On the contrary, “has been increasing. Those who accept active management will choose the ETF wrapper.”
However, some research companies predict that underdeveloped areas of actively managed ETFs will continue to grow strongly, such as active equity products. ISS market intelligence expect Stock selection ETF sales will generate between 325 billion and 590 billion U.S. dollars in traffic between 2022 and 2026. According to data from Morningstar, as of November, as of November this year, the sales of active stock ETFs were slightly more than $33 billion.
Of course, the adoption of active stock ETFs after the pandemic was transformative for Ark Investment Management, which was founded by Cathie Wood in 2014. According to Morningstar Direct, since the beginning of 2020, the company’s assets have surged from US$3.5 billion to more than US$35 billion today (although it is lower than the high of US$50 billion in June 2021), with net sales of 300 One hundred million U.S. dollars.
Nick Elward, senior vice president of institutional products and ETFs at Natixis, believes that Ark’s focus on soaring stocks such as Tesla, whether these products are actively managed or part of thematic index, will attract investors’ attention.
For other parts of the industry, the availability of portfolio shielding technologies, such as those licensed by NYSE, Fidelity, Precidian Investments, and Blue Tractor, as well as proprietary models from T Rowe Price and Invesco, gave portfolio managers an opportunity to see the opportunity, Elward said, ETF packaging Device.
Between active non-transparent ETFs and the first batch of mutual funds converted to ETFs, “active managers see opportunities for a type of tool that can bring many benefits to investors, such as tax efficiency and [lower] Cost,” he added.
*Ignites is a news service released by FT Specialist for professionals in the asset management industry. It covers everything from new product releases to regulations and industry trends.Trials and subscriptions are available at ignites.com.