U.S. investors may understand the growing domestic popularity of active ETFs, but global demand is rising, too. Investors across disciplines, from the U.S. to Europe and China, are flocking to active investing with ETFs. That finding from Brown Brothers Harriman in its latest survey? speaks to the case for greater attention to active.
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Many active investors have already gotten into ETFs, but the wrapper still remains a bit misunderstood by many. ETFs provide tax advantages with their creation/redemption model. At the same time, they offer significant transparency and traceability, given that they operate as securities.
Active ETFs combine the fundamental research capabilities of active management with those advantages. That may be why so many investors globally are considering adding active ETF allocations. Seventy-eight percent of the survey’s respondents shared that they plan to increase their active ETF exposure in the next year.
Interestingly, just under half of respondents said that they’d move out of index mutual funds into active ETFs. That suggests active ETF demand may go beyond the active/passive discussion, but also cross product structures from mutual funds to ETFs.
Further, while many investors hesitate about active ETFs that lack big AUM totals, many respondents shared that even $50 million would be sufficient size to feel comfortable investing in an active ETF strategies. That could help open up the recent crop of new active launches and boost them to reach a greater audience.
Given the ongoing inflation and interest rate back-and-forth, investors may want to seek out flexible active strategies. T. Rowe Price offers a variety of active options. For example, the T. Rowe Price Capital Appreciation Equity ETF (TCAF ) stands out as one strategy. Charging only 31 basis points, it surpassed $1.5 billion in AUM in just under a year, per VettaFi data.
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