In yet another edition of active ETFs growing into a real force, new research from Strategas ETF Research highlights a banner start to 2024 for the actively-managed strategies. Active ETFs saw more than $120 billion in flows, per the firm’s research, with the growing variety of strategies in the wrapper contributing. Those flows came amid a continued trend of flows for mutual funds, speaking to a broader shift in the market.
See more: The Case for Active Investing in the Second Half of 2024
Mutual funds, which once grew steadily in equity flows, have now seen a significant drop off in cumulative active equity fund flows, the research showed. That may owe in large part to active ETFs providing many of the same benefits with some additional highlights. Active mutual funds produce many more taxable events than active ETFs do, thanks to ETFs’ creation/redemption mechanism.
The Rise and ... Rise of Active ETFs
What’s more, active ETFs also trade more frequently, provide liquidity, and offer much more transparency. That can provide a lot of comfort for investors who want to know what each strategy is doing and who want to feel confident that they can trade the ETF at will.
The active ETF space sits at about half a trillion in AUM, per Strategas, with a growing diversity of strategies in the wrapper. T. Rowe Price offers a suite of actively-managed ETFs for investors to consider, for example. Ranging from growthier offerings to fixed income strategies, its roster provides some data points for the growing flows into the space.
The T. Rowe Price Capital Appreciation Equity ETF (TCAF ), for example, has picked up significant AUM since inception. Having launched a little more than a year ago, it already has $1.8 billion in assets. The strategy employs a long term capital appreciation approach, actively managed by David Giroux. As actively-managed ETFs continue to grow, investors look set to have a more and more diverse set of options to consider.
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