2023’s big year for active ETF growth already presaged a big year in 2024, too. Looking at active AUM abroad, though, perhaps signals even more potential in the U.S. Recent Morningstar Direct data shows active ETF assets have grown significantly in foreign markets like South Korea and Australia, up to as much as 30.7% in those respective markets.
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That may suggest active strategies can pick up a lot of assets in the U.S., too. Whereas foreign markets have seen active ETFs rise much more quickly thanks perhaps to earlier approval for the vehicle, U.S. active investors have stuck with mutual funds. However, client demand abroad suggests there could be plenty of space for active managers to gather assets in the U.S, too.
Active ETF Share in the U.S.
Despite more and more active ETFs being launched in the U.S., active only adds up to 6.8% of the ETF market. With more and more issuers joining the field, however, and the potential of a future ETF mutual fund share class, active strategies could continue to pick up AUM. That AUM could arrive from mutual funds, for example, thanks to ETFs’ advantages in tax efficiency and transparency.
Indeed, a significant aspect of active strategies picking up major flows relative to their smaller AUM may have been their ability to ride volatility. 2023 saw lots of media headlines about a potential recession that didn’t materialize. At the same time, active investors looked to the strategies for potential outperformance and adaptation to a very concentrated stock market.
T. Rowe Price offers a suite of active funds that may intrigue investors. The shop offers ETFs like the long term capital appreciation ETF (TCAF ), the T. Rowe Price Capital Appreciation ETF, that take a deep look at potential investments.
For more news, information, and analysis, visit our Active ETF Channel.
