Active ETFs have become increasingly popular with investors and advisors over the past couple of years as strong demand has driven a growing supply, according to Tim Coyne, head of ETFs at T. Rowe Price.
“Active ETFs are really starting to grow and become a more prominent part of the market,” Coyne said. “There’s a lot of demand for quality active strategies, but there wasn’t necessarily the supply of active strategies that were delivered through ETFs.” However, this has “really changed in the last couple of years,” and more advisors are using ETFs to construct the active portions of their portfolios.
Speaking with VettaFi at Exchange: An ETF Experience, Coyne said that he’s been seeing that clients understand “that the next ten years aren’t going to look like the last ten years, and that fundamental research and stock selection is going to become critically important.”
“Passive had a nice run, but increasingly we are seeing more advisors look at active management as a way to add value to their portfolios and their client’s portfolios,” he added.
The actively managed ETF industry grew across nearly all asset classes throughout 2022, with issuers launching 246 active ETFs in 2022 and flows into active ETFs representing roughly 14% of total industry inflows, according to the New York Stock Exchange. With more managers issuing more active ETFs, Coyne sees “this as a huge opportunity” for T. Rowe Price as the firm continues to develop its capabilities around active ETFs.
“ETFs are a strategic focus for T. Rowe Price and will continue to be so,” he said. “So, we look at this as a huge opportunity to not only service our current clients but also to expand our client base.”
During a panel on active management at Exchange, Coyne told attendees that active management has “historically played a major part in an advisor’s portfolio and will continue to do so,” but that “active ETFs have not been around” until recently.
“There’s a lot of categories that were not covered over the past several years. So, you’re seeing a lot of asset managers coming to the market,” he said at the panel. “We’re seeing a lot of products across the core categories and extending out beyond the core, so there’s just more tools for advisors to use for portfolios.”
T. Rowe Price offers a suite of actively managed ETFs. T. Rowe Price has been in the investing business for over 80 years, conducting field research firsthand with companies, utilizing risk management, and employing a team of experienced portfolio managers carrying an average of 22 years of experience.
“For us at T. Rowe Price, it’s really about leveraging the firm’s global investment research platform, and I think that’s a real differentiator for us,” Coyne told VettaFi. “That fundamental research helps us be nimble and really supports the investment selection.”
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