Growth in active management for exchange traded funds (ETFs) is looking like a hot spot for the business this year.

According to Reuters, there are many reasons that indicate this sector can be popular this year:

  • For professional investors attempting to beat the market, active ETFs are an ideal vehicle because they carry a relatively low cost and have tax efficiency.
  • For retail investors, they provide transparency and access to strategies that would be prohibitively expensive otherwise.
  • Like mutual funds, tech stocks, tech funds, and other hot investments that dominated the landscape for a time, the ETF universe becoming a vastly populated one. But this is one trend that isn’t going to end.
  • Actively managed ETFs at this point are still in their infancy—but State Street, which produces the SPDRs, has already filed with regulators for the opening of an actively managed ETF, and they’re not alone; other major fund companies have done the same thing. [4 Reasons to Be Sold On Actively Managed ETFs.]

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.