Active investing had a banner year in 2023, with active strategies picking up major flows relative to AUM. Active strategies themselves have offered investors a growing range of options to address uncertainty, particularly around interest rates and an expensive U.S. economy. A new report from Morningstar has highlighted active ETFs’ ascent, with the ETFs closing in on 10% of total ETF market share.
See more: This Trio of Active ETFs Sending Buy Signals
The report, published this week, found that in just the last five years, active ETFs’ market share has more than quadrupled. Active strategies have picked up more than $370 billion in flows while active mutual funds have lost almost $1.8 billion, the piece noted. That’s due in part to ETFs’ notable tax advantages and transparency. However, active ETFs are more than just the ETF wrapper.
Indeed, active ETFs offer benefits to investors outside of taxes. Active managers have more flexibility with which they can invest. That can empower an equities strategy that mostly looks to replicate an index to over- or underweight certain holdings as needed. On the other end of the spectrum, it allows seasoned managers to make a mark, crafting bespoke approaches for investors to add on top of core allocations.
Active ETFs offer notable strengths in fixed income, too. Passive strategies required to track indexes can’t always scrutinize bonds as closely as active strategies can. Active flexibility can help in the more complicated landscape of debt securities, especially given the live interest rate market right now.
T. Rowe Price offers a suite of actively managed ETFs for investors to consider. The firm’s suite includes equity and fixed income funds. It includes funds like the T. Rowe Price Capital Appreciation Equity ETF (TCAF ), which has picked up significant AUM since its launch last June.
For more news, information, and analysis, visit our Active ETF Channel.
