ETFs
The best and worst performing active ETFs so far in 2024
Active ETFs are increasingly popular with investors and several fund companies in Europe are launching new products to meet this demand. But how did these products perform in the first half of 2024?
Active ETF universe remains modest in Europe, according to Morningstar research April reportThese funds represent only 2% of total ETF assets on the continent. If we include different ETF share classes in multiple currencies, there are 170 active ETFs available to European investors. Of these, 10 were launched in 2024.
For this analysis, we look at the oldest share class versions for which multiple ETFs exist. In some cases, where the oldest share class is not available, we have included the share class with a Morningstar Medalist rating. In the rare cases where neither was available, we have selected the best-performing one across currencies.
It is also important to note that the currency you choose for your share class can make a significant difference. For example, the best performing active ETF overall, JPM Japan Research Enhanced Equity ESG ETFis up 22.70% in Japanese yen terms. However, the oldest share class of the same product, listed in U.S. dollars, returned only 5.81%.
The top 10 performers are all equity strategies investing in Japan, Europe, the US, emerging markets and the world. We also find European, emerging and global ETFs at the bottom of the list, alongside long/short equity and bond ETFs.
Only 24 active ETFs posted negative returns during the period, including six in double digits. In contrast, 21 ETFs posted growth of more than 10%.
Beware of “shy and active” ETFs
Although the ETFs highlighted here are more active than their passive counterparts, Morningstar’s recent report, Active ETFs in Europe: Small, Shy, and on the Rise, highlights that these vehicles may be less active than expected.
“Most active ETFs available in Europe are ‘timidly active’, with lower active share and/or tracking error than similar active open-ended funds,” the report said. “Therefore, investors should moderate their expectations of excess return on these products.”
Comparing the 20 largest active equity ETFs to a representative ETF of a specific category, the analyst team found that half of them were less than 50% active (based on a historical average).
Which active ETFs performed best?
Among the best active ETFs in the first six months of 2024, those investing in US and global stocks are the most highlighted, with three ETFs each. European stocks appear twice.
ETF Fidelity Sust Rsh Enh Jpn Eq JPY Acc
The best performer, however, was Fidelity Sustainable Research Enhanced Japan Equity ETF – the Yen iteration. This Morningstar Gold-rated ETF has returned 21.28% through June 26, 2024. It is also the third-cheapest ETF among the top performers, with an ongoing fee of 0.25%.
Lyxor ETF Wise Quantitative Strategy
With a return of 19.12% over the same period, the second best performing ETF was Lyxor ETF Wise Quantitative Strategy. The Euro ETF focuses on European large caps and was launched in 2007. It is the oldest active ETF in our database. Its fee is 0.60%.
Invesco Quantitative Strategies EUR PfH Acc Multifactor Global ESG Equity ETF
The third ETF on the list is Invesco Quantitative Strategies ESG Global Equity Multifactor UCITS ETF – one of three global equity ETFs on the list. The product has a 5% exposure to The Magnificent Seven Nvidia stock (NVDA) and has returned 17.86% since the beginning of January. The ongoing fee for the Invesco ETF is 0.30%.
Which active ETFs performed the worst?
The bottom table of active ETF performance shows more variation than the top-performing ETFs. There are no repeating categories, and most asset classes are represented, from stocks and fixed income to alternatives and real estate.
JPM Equity Long-Short USD Acc ETF
The worst-performing active ETF so far this year is JP Morgan Equity Long-Short, which has fallen 22.37%. It is also among the most expensive ETFs on the list, with a yield of 0.68%. It was launched in 2017.
ETF JPM Managed Futures USD Acc
JP Morgan’s second alternative ETF, launched on the same day as the Equity Long-Short product mentioned above, is the worst performer. JP Morgan Managed Futures is a product that invests in both long and short exposures across multiple asset classes and has fallen 15.15% so far this year. The ongoing charge is 0.57%.
HSBC Economic Scale Worldwide Equity ETF
Third from the bottom is an ETF that invests in global large-cap stocks. HSBC Economic Scale Worldwide Equity lost 13.38% on June 26 and charges 0.25%. It was launched in 2014.
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