Investors poured $20 billion into actively managed ETFs in May, representing 21% of the industry’s cash haul. This continues a yearlong trend. In the first five months of 2024, active ETFs gathered 29% of the $326 billion in net inflows. This is impressive given that active is just 7% of U.S. ETF assets.
Demand for active ETFs was broad based, as more than 500 products received new money in May. However, let’s touch on a few of the most popular products.
Looking to Loan ETFs
The Janus Henderson AAA CLO ETF (JAAA ) added $1.4 billion in May to push its asset base above $10 billion. The active bond fund launched in October 2020. CLOs can provide high income without necessarily taking on significant credit risk. There has been pent-up demand for a diversified, liquid way to access the floating-rate CLO market. Janus successfully tapped into it with its active management expertise.
JAAA sports a 6.7% yield and was up in value 3.4% in the first five months of 2024.
Nasdaq Exposure With an Income Kicker
The jPMorgan NASDAQ Equity Premium Income ETF (JEPQ ) pulled in $1.0 billion in May. The $14 billion ETF came to market in May 2022. This covered call ETF uses options to actively enhance the income and reduce the volatility of the large-cap growth index. JEPQ holds nearly all the Nasdaq-100 stocks and had a 10% yield at the end of May.
We’re increasingly seeing advisors turn to covered call ETFs as an alternative to traditional equity exposure. JEPQ rose 11.7% year-to-date through May, outperforming the Nasdaq-100 index by more than 100 basis points.
Core Equity Exposure in ETF Form
While JEPQ provides equity exposure in an alternative manner, another popular ETF does it in the traditional way. The Capital Group Dividend Value ETF (CGDV ) added $785 million in May. The fund, which turned two years old in February, manages $8.5 billion.
Management recently favored industrials stocks like Carrier Global and General Electric, but it also owns mega-cap growth information technology stocks like Microsoft. The team focuses on dividend-paying stocks. As of end of May, CGDV rose 10.4%.
While no active ETF made the top 10 net inflows for all ETFs in May, the BlackRock US Equity Factor Rotation ETF (DYNF ) did for all of 2024. The equity ETF has pulled in $7.5 billion, making it the ninth most popular ETF of any kind. In May, the fund added just over $255 million.
We previously highlighted how DYNF was added to BlackRock’s model allocation portfolios in January. This directly and indirectly boosted its asset base.
Happy Anniversary T. Rowe Price ETFs
On Friday, five T. Rowe Price actively managed equity ETFs hit their one-year anniversaries, cause for celebration. Passing this key threshold often helps a fund gain traction as the fund becomes more broadly available on platforms. We covered the T. Rowe Price Small-Mid Cap ETF (TMSL ) in a video profile.
As such, my eyes are now on the T. Rowe International Equity ETF (TOUS ). There are far fewer actively managed, fundamentally focused international funds.
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