Active ETF launches are helping drive a record pace for ETF roll-outs in 2024. Following a record-breaking set of launches in 2023, the industry may yet break another record, per recent media reports. Within that record ETF launch pace, active strategies are playing an important role, highlighting their changing place in many investors’ thoughts when crafting an overall portfolio.
See more: Rising Active ETF TSPA Surpasses $700 Million in AUM
New data from Morningstar found that 236 ETFs have launched so far this year compared to just 155 combined active and passive strategies last year. What’s more, 166 active ETFs have launched this year compared to 155 last year at the same time.
That record ETF launch pace could owe to a changing dynamic within active. Not only are many investors getting a better understanding of how active ETFs offer liquidity, but the way investors want to use active ETFs is changing. They are playing an increasingly important role toward the center of portfolios, with some offering core-plus style exposures.
In a market environment in which concentration risk looms large, active could appeal to investors as another potent option. Their ability to look more deeply, and with greater flexibility, at stocks, could find opportunities outside those big names. What’s more, active investing may be better positioned to adjust to headwinds like a higher-for-longer rate regime, or to benefit from tailwinds like potential rate cuts next year.
For example, T. Rowe Price offers strategies like the T. Rowe Price Capital Appreciation Equity ETF (TCAF ) that might appeal. It charges a 31 basis point fee to actively invest in high-quality large-cap U.S. stocks. Holding a sizeable portfolio of about 100 names, it aims for capital appreciation. That approach has helped it gather more than $1.7 billion in AUM since launching in 2023.
Active ETFs are here to stay — and they’re growing. With record ETF launches this year driven in part by active, active strategies look set to play an increasingly important role for many investors’ portfolios.
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