Actively managed ETFs reached a new milestone of $1trn assets under management globally at the end of September, marking a dramatic shift in how investment products are delivered to investors.
According to data from ETFGI, the growth represents a nearly 43% increase from $737.1bn AUM at the end of 2023.
Year-to-date net inflows reached $240bn, more than double the $114bn seen in the same period last year, according to the ETFGI report.
“There are many investors now who prefer to do all their investing through the ETF wrapper, in the US especially. When there are ETFs available, they will buy them over mutual funds.” Deborah Fuhr, managing partner and founder at ETFGI, told etf.com.
“We also have seen the conversion of SMAs [separately managed accounts], mutual funds, hedge fund, private funds, into ETFs.
The surge reflects a maturing market where more products have established three-year track records and reached $100m AUM, making them easier for investors to embrace, Fuhr said.
Active management evolution
Notably, only 52 of 1,659 actively managed ETFs in the US use semi-transparent or non-transparent models, accounting for just $14bn in assets, the ETFGI report showed.
“For so many years, active asset managers said they did not want to do ETFs, and they would consider it if they could do semi or non-transparent. And clearly that is no longer the case,” Fuhr said.
Fixed income active ETFs gathered $86.4bn in net inflows year-to-date, compared to $36.2 billion in the same period last year.
The preference for active management in fixed income stems from index complexity, Fuhr explained.
“Many of the fixed income indices are not really something you would ever try to replicate, because they have thousands of bonds,” she noted.
“The ability to actually access all those bonds is very difficult or impossible. You do find that in the fixed income space, active management has been embraced for a very, very long time”
At the end of September, the global active ETF industry included 2,962 ETFs from 485 providers listed on 37 exchanges across 29 counties, according to ETFGI data.
