Active ETFs Are Dominating 2021 Fund Launches

As CFRA Research Director of ETF & Mutual Fund Research Todd Rosenbluth points out, more than a quarter of that tally, 51 funds to be precise, debuted in June alone. Another interesting fact: two-thirds of the new ETFs that debuted in the first six months of the year were active funds.

That group includes the T. Rowe Price U.S. Equity Research ETF (TSPA), ARK Space Exploration ETF (ARKX), Fidelity Magellan ETF (FMAG), Franklin Exponential Data ETF (XDAT), and the JPMorgan ActiveBuilders Emerging Markets Equity ETF (JEMA).

It appears that the hot pace for active ETF launches is continuing in the early innings of the third quarter. Just last week, J.P. Morgan Asset Management added to the ActiveBuilders suite with the launches of the JPMorgan ActiveBuilders U.S. Large Cap Equity ETF (JUSA) and JPMorgan ActiveBuilders International Equity ETF (JIDA).

“While active ETFs represent just 4% of U.S. listed assets at the end of June, two-thirds of the new offerings from the first half of 2021 employ active management,” said Rosenbluth.

The CFRA analyst also highlighted semi-transparent ETFs – funds that don’t disclose holdings on a daily basis – debuting in the first half of the year. FMAG and T. Rowe Price’s TSPA are examples of such funds, as are the ALPS Active REIT ETF (REIT) and the Alger Mid-Cap 40 ETF (FRTY), among others.

While easy access to holdings data has long been a selling point of traditional passive ETFs and active funds, Rosenbluth noted that the success of some semi-transparent ETFs indicates investors aren’t hung up on daily disclosure.

“CFRA does not think investors are focused on how often a fund shares its portfolio, but rather the fund’s exposure and other fund-specific metric,” he said.

Time will tell, but it’s certainly possible that the back half of 2021 will bring more active fund launches, especially on the fixed income front. For its part, Maryland-based T. Rowe Price recently unveiled plans for the T. Rowe Price Total Return ETF, T. Rowe Price QM U.S. Bond ETF, and T. Rowe Price Ultra-Short Term Bond ETF.

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