The ETF industry has much to be grateful for this year, but perhaps one of its greatest reasons to be thankful has been active ETFs. Active strategies have contributed majorly to overall ETF launches and development. What’s more, active funds anew and old have also performed well so far in 2025, adding an important twist to categories like tech and foreign equities. That may see investors increasingly look to the category for performance in the new year.
See more: Geopolitical Risks Can Shock Portfolios — Active Can Help
Over 1,300 active ETFs launched between the start of 2024 and the start of this month. Active ETF proliferation has skyrocketed since the arrival of the so-called “ETF rule” in 2019. That rule eased the path for numerous ETF launches, helping asset managers increasingly compete in traditionally passive-heavy categories.
Thankful for Active
In core allocations, for example, active strategies are offering more and more competitive fees to match up with their passive, index-tracking peers. That can help add flexibility and active outperformance to that core allocation area. For example, for investors who may have or are looking to have a core-plus tech allocation, active’s fundamental research capabilities can help. Especially as concentration risk looms over portfolios, that can help find those tech firms prepared to meet the moment.
Looking to the active ETFs that have contributed heavily this year, active foreign equities ETFs deserve mention. The dollar’s serious drop-off this year as well as tariff risk saw many investors flock to ex-U.S. equities. That has seen active ETFs investing abroad perform well, at times bettering their passive rivals.
2025 has offered plenty of volatility, and active ETFs have been there to help. Whether adding income, looking for outperformance, or simply helping to manage volatility, active management has helped bring new life to markets. When passive funds disappoint, investors and advisors can be thankful for the active alternatives available to them.
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