Actively Managed ETFs

The actively managed exchange traded fund space only makes up a fraction of the overall industry, but active ETFs are finally beginning to catch investors’ eyes.

Of the 87 ETFs launched this year, active funds made up 19% of the new new assets, reports Eric Balchunas for Bloomberg. Active ETFs are seeing greater interest, especially after the highly successful launch of the PIMCO Total Return Bond ETF (NYSEArca: BOND), which attracted $4 billion in assets in a little over a year.

Mutual fund giants like Franklin Templeton are positioning to jump into the ETF industry. [Franklin Templeton Readying First Foray into ETFs]

BlackRock iShares also recently filed to launch a suite of actively managed foreign currency-related ETFs. [iShares Crafts Actively Managed Currency ETFs]

There are 61 actively managed U.S.-listed ETFs with $14.3 billion in assets, compared to almost 1,500 U.S.-listed ETFs on the market with $1.5 billion in assets, according to XTF data.

In comparing active ETFs with mutual funds, the ETF structure provides better tax efficiency, transparency and intra-day liquidity.

Actively managed ETFs are also cheaper than comparable mutual funds, but the active ETFs are also more costly than traditional beta-index ETFs. The average expense ratio on active ETFs is 0.95%, compared to 0.62% for the overall ETF industry.

Next page: New actively managed ETFs