In a sign that more investors want more guidance in their portfolio and that exchange-traded funds are a better way to invest in strategies of all shapes and sizes, an increased number of actively managed ETFs are hitting the market. Last week saw the launch of six new active ETFs, bringing the total number of active ETF launches to 212 year-to-date.
As Morningstar’s Ben Johnson noted on Twitter, that’s “more than any year save 2021.” And we’ve still got “with two months left in 2022.”
“Active ETF launches have represented the majority of new ETF launches over the past three years,” Johnson wrote in a follow-up Tweet, adding: “58% of all actively-managed ETFs have been launched since the beginning of 2020.”
The Morningstar head of client solutions also noted that the market share of active ETFs “has climbed above 5%, thanks largely to the fact that they’ve been punching above their weight on the flows front.” And for the 12 months that ended Sept. 30, active ETFs brought in 11.5% of net inflows into all ETFs.
So, what’s been driving all this growth, especially since the recent headlines for active management hasn’t been stellar? Well, as Johnson sees it, a rising tide lifts all boats.
“More investors, advisors, and asset managers have accepted ETFs as a better way to consume/invest in/distribute investment strategies of all stripes–active, passive, and all things in-between,” he concluded.
While passive strategies lack the flexibility to adapt to changing market environments, active ETFs can offer the potential to outperform benchmarks and indexes. Plus, active managers with greater resources and greater scope benefit from economies of scale, which can often translate to better returns.
“Active managers have the flexibility to take advantage of market volatility and add to favored positions when prices become more attractive,” said Todd Rosenbluth, head of research at VettaFi.
As part of its lineup of active ETFs, T. Rowe Price offers a suite of actively managed equity ETFs, including the T. Rowe Price Blue Chip Growth ETF (TCHP), the T. Rowe Price Dividend Growth ETF (TDVG), the T. Rowe Price Equity Income ETF (TEQI), the T. Rowe Price Growth Stock ETF (TGRW), and the T. Rowe Price US Equity Research ETF (TSPA).
T. Rowe Price has been in the investing business for over 80 years through conducting field research firsthand with companies, utilizing risk management, and employing a bevy of experienced portfolio managers carrying an average of 22 years of experience.
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