Active ETF Appeal Increases as Money Managers Grow AUM | ETF Trends

The 500 biggest money managers globally grew their assets under management 14.5% last year, hitting a combined $119.5 trillion and increasing revenue, all in the midst of a pandemic.

A recent survey from Pensions & Investments and the Thinking Ahead Institute reported a 15.4% growth of active assets under management, increasing to $23.71 trillion while passive management assets brought in $8.34 trillion.

“The year overall turned out to be much better than expected given the monetary and governmental support that resulted in markets being very strong in the second half of 2020, which certainly was a big boost to asset managers,” said Rory Callagy, managing director at Moody’s Investors Service Inc.

There has been a drastic uptick in funds being offered; the survey found that 70% of the 208 firms that had responded consistently over the last five years introduced more strategies last year. A high percentage of those strategies has been exchange traded funds (ETFs) as active managers move to expand into the ETF arena.

“We are seeing more competition on the ETF side with firms entering the market, firms that are converting existing mutual funds into an ETF wrapper or active ETFs where they can take (an) existing capability and offer it in a wrapper. That seems to be resonating with investors,” said Callagy.

Active management firm T. Rowe Price believes in the difference and benefits to active investing and active management. The firm currently offers eight actively managed ETFs for investors who are looking to invest in an environment of record IPOs that benefits stock pickers. The firm brings a bevy of experience and research to its products, with portfolio managers averaging over 20 years in investing each, as well as over 400 investment professionals dedicated to researching companies within ETFs.

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