ETFs
ETF debuts sharply higher as actively managed offerings gain ground
Stay informed with free updates
Simply sign up to the myFT Digest of Exchange Traded Funds, delivered straight to your inbox.
New ETFs are coming to market at a record pace this year, led by securities overseen by fund managers who decide which stocks to include.
At least 236 ETFs have been launched so far in 2024, including 166 actively managed ETFs, according to Morningstar. There were 155 active and passive ETFs combined at the same time in 2023.
The new class of active ETFs comes with a range of features, including those that pay additional income, double exposure to certain stocks or guaranteed protection against losses. They attract excessive people interest and capital with investors.
“While most of the money still resides in low-cost, broad-market index-based ETFs, many of these new products have been gaining traction,” said Todd Rosenbluth, head of research at VettaFi, a consulting firm.
Capital Group announced Thursday the addition of seven new active ETFs to its 21-stock portfolio with a market capitalization of $29 billion. It now holds about 4 percent of the active ETF market.
These launches follow a pair of new active ETFs launched earlier this month by BlackRock. Although the $10 trillion asset manager is best known for its iShares passive ETFs, it has quietly doubled its active ETF offerings over the past year.
“Active ETFs are becoming an integral part of investors’ portfolios around the world, with financial advisors increasingly incorporating them into their model-based practice,” said Jessica Tan, head of Americas for global product solutions at BlackRock , in a press release.
Other strategies are intended for more specialized uses. A joint venture between REX Shares and Tuttle Capital Management plans to offer dozens of single-stock ETFs that offer bets for and against a range of companies – including Trump Media and meme stock favorites GameStop and AMC Entertainment – at exposure double the normal exposure, according to a recent regulatory filing.
“We are seeing another step toward the extinction of ETF mutual funds,” said Matt Tuttle, chief executive of his namesake company. “The only thing mutual funds have over ETFs is an edge in active strategies.”
The $26 trillion mutual fund industry is much larger than the nearly $9 trillion U.S. ETF market. But active ETFs have brought in nearly $100 billion in the first five months of 2024, while active mutual funds have lost about $150 billion, according to Morningstar.
A study by London-based consultancy ETFGI released Monday found that actively managed ETF assets globally reached around $889 billion at the end of May, eclipsing April’s record of $840 billion. About $662 billion is in the United States, according to Morningstar.