ETFs
5 active ETFs appreciated by investors in 1 semester
The investment world has witnessed major upheaval in recent years, driven by changing global economic fundamentals. Investor sentiment is no longer the same as it was in the aftermath of the 2008 financial crisis, at the time of the Eurozone debt crisis and at the height of the COVID-19 crisis.
Previously, the investment landscape was dominated by passively managed or index funds. Their low cost and transparent structure made them highly sought after. However, the changing investment landscape has forced ETF issuers to become more agile.
To be sure, active funds are arguably expensive, as they involve research costs associated with manager due diligence and additional costs in the form of a large bid/ask spread beyond the expense ratio. However, issuers continue to be more innovative and intend to offer more dynamic products suited to current improving but volatile market conditions.
At the heart of the growth of active ETFs
Money managers have poured money into the active sector for 50 straight months, after allocating $22 billion in May, according to Bloomberg. Actively managed ETFs appear poised to amass a record $260 billion this year, nearly double last year’s $140 billion, according to State Street Corp., the third-largest ETF manager.
At current levels, active ETFs have carved out a significant niche in the U.S. market, with $684.5 billion in total assets across 1,479 products. The average expense ratio is 0.71%. Active ETFs have seen significant growth in recent years, consistently attracting a minimum of $25 billion in assets per year since 2018, with an impressive organic growth rate exceeding 30% each year, according to Morningstar.
Even though active funds have raised about $107 billion this year through early June, or 32% of all ETF flows, they still represent only a small 7% share of the roughly $9 trillion of total ETF assets, Bloomberg data showed. But the future looks bright. Morningstar Direct expects the total number of actively managed ETF offerings to exceed that of passive offerings over the next three to five years, as reported on Bloomberg.
Notable Players in the Active ETF Industry
Firms like Dimensional Fund Advisors, the largest active ETF issuer, and JPMorgan Asset Management are leading the market growth, accounting for about 40% of total active ETF assets. While Dimensional Fund Advisors is known for its systematic funds, JPMorgan has managed to rake in billions of dollars in cash from ETFs that deploy options overlay strategies to generate higher yields, according to Bloomberg.
The story continues
Focus on ETFs
Against this backdrop, we highlight below some active ETFs that have gathered immense assets in the first half of 2024.
JPMorgan Nasdaq Equity Premium Income ETF JEPQ – $5.19 billion in revenue since the beginning of the year
The fund seeks to generate monthly distributable income and exposure to the Nasdaq 100 with less volatility. The fund has a massive asset base of $14.69 billion. Microsoft (7.49%), Apple (5.77%), and NVIDIA (5.43%) are the top three holdings in the fund. The fund charges 35 basis points in fees and yields 8.83% annually.
JPMorgan Equity Premium Income ETF JEPI – $2.17 billion in inflows since the start of the year
The fund’s defensive stock portfolio uses a proven bottom-up fundamental research process for stock selection. The fund has a huge asset base of $33.82 billion. No stock represents more than 1.76% of the fund. The fund charges 35 bps in fees and generates an annual return of 7.31%.
GraniteShares 2x Long NVDA Daily ETF NVDL – $2.29 billion in entries since the start of the year
The $4.81 billion ETF seeks to track the daily percentage change of NVIDIA Corp. common stock twice. The fund’s expense ratio is 1.15%. The fund generates an annual return of 5.14%.
JPMorgan Active Growth ETF JGRO – $856.7 million in revenue since the start of the year
JGRO is a transparent, actively managed ETF that combines two proven bottom-up fundamental approaches to seeking underappreciated growth opportunities. Microsoft (10.43%), NVIDIA (7.64%) and Amazon (6.53%) are the fund’s three largest holdings. The fund charges 44 bps in fees.
Dimensional US Equity ETF DFUS – $733.4 million in entries since the start of the year
The ETF seeks to achieve long-term capital appreciation by investing in U.S. stocks. The fund has amassed approximately $9.6 billion in assets. Microsoft (5.93%), Apple (5.43%) and NVIDIA (4.59%) occupy the top three places in the fund. It only charges 9 basis points in fees.
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JPMorgan Equity Premium Income ETF (JEPI): ETF Research Reports
Dimensional US Equity ETF (DFUS): ETF Research Reports
JPMorgan Nasdaq Equity Premium Income ETF (JEPQ): ETF Research Reports
JPMorgan Active Growth ETF (JGRO): ETF Research Reports
GraniteShares 2x Long NVDA Daily ETF (NVDL): ETF Research Reports