One of the largest obstacles to the growth of the actively managed ETF space is the reluctance of managers to reveal their strategies daily, as ETFs are totally transparent and holdings would be revealed in real time. This transparency could hinder the performance of a manager before his strategy is completely implemented. [Investors Actively Manage Passive ETFs]
Secondly, the limited track record of these funds also keeps some managers from jumping into the sector. Actively managed ETFs are a new concept, so thre is limited data and performance on these types of tools.
Areas of the market where active management within an ETF could be prosperous, according to S&P Capital IQ, includes categories where investors think there are pricing inefficiencies, area where there are a lack of cost effective access to a certain asset and offerings where there is a highly respected fund manager.
Tisha Guerrero contributed to this article.