“It’s no longer just, here’s indexing, but here’s indexing and here’s how to use it in your portfolio. That will become a differentiator in the marketplace,” Benjamin F. Phillips, of Quirk & Associates LLC, said. “Those firms content to provide only the investment tools “will find themselves less able to defend their fee proposition,” Phillips said.
Index providers are keen to active management just as the first true active ETF has met success. The recent interest and surge in assets has created renewed interest in a sector that has had trouble getting off the ground over the past few years. [PIMCO Total Return Paves the Way for More Active ETFs]
Active ETF management has come into closer focus as the PIMCO Total Return ETF (NYSEArca: BOND) has had huge success, gathering around $2 billion in the past 6 months. While the ETF market is dominated by index products, Pimco sees it “as another means to provide individual investors access to PIMCO’s thinking, strategy and active management,” Chief Operating Officer Douglas M. Hodge said.
Tisha Guerrero contributed to this article.