Active ETFs are taking the world by storm - and this is its next frontier
Active ETFs are helping investors access the benefits of active management through a liquid and cost-effective ETF structure.
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 the top influential factors that have shaped the current ETF landscape and highlight 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.
Active ETF assets grew faster than the overall ETF industry
Source: Trackinsight. “Global ETF Survey 2024”. Published February 2024, JPMorgan Asset Management
…and demand remains strong
Nearly three-quarters of ETF investors polled in the survey are currently investing in or are interested in investing 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 exposure to active ETFs.
How do you expect your exposure to active ETFs to change in the next two to three years?
Source: Trackinsight. “Global ETF Survey 2024”. Published February 2024. JPMorgan Asset Management. Percentages may not total 100 due to rounding.
Why invest in active ETFs?
According to the Global ETF Survey 2024 by Trackinsight, investors typically tap into active ETF solutions to solve 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.
Source: Trackinsight. “Global ETF Survey 2024”. Data as of 29.12.2023.
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 continue 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.
What is your preferred investment strategy in the fixed income ETF space?
Source: Trackinsight. “Global ETF Survey 2024”. Data as of 29.12.2023.
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.
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Unless otherwise stated, all data cited in this publication are sourced from “The Global ETF Survey 2024: 50+ Charts on Worldwide ETF Trends”, Trackinsight. Data as of 29.12.2023. The report is powered by Trackinsight data from more than 10,000 exchange-traded products (ETPs) and insights gathered from over 500 investors overseeing a total of US$900 billion in exchange-traded fund (ETF) assets.
Provided for information only as of date of publication, not to be construed as offer, investment recommendation or advice. Forecasts, projections and other forward looking statements are based upon current beliefs and expectations, may or may not come to pass. They are for illustrative purposes only and serve as an indication of what may occur. Given the inherent uncertainties and risks associated with forecast, projections or other forward statements, actual events, results or performance may differ materially from those reflected or contemplated.
Diversification does not guarantee investment return and does not eliminate the risk of loss. Yield is not guaranteed. Positive yield does not imply positive return.
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J.P. Morgan Asset Management
At J.P. Morgan Asset Management, we believe investors deserve an expert global partner they can trust to step up and deliver strong outcomes. From the largest institutional investors around the world to financial advisors around the corner, our...
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J.P. Morgan Asset Management
At J.P. Morgan Asset Management, we believe investors deserve an expert global partner they can trust to step up and deliver strong outcomes. From the largest institutional investors around the world to financial advisors around the corner, our...
Expertise
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