Despite the forecasts heralding the death of active management, Bloomberg Intelligence senior ETF analyst Eric Balchunas believes that active management is in fact “alive and well.”
Moderating a panel on the changing face of active management at Exchange: An ETF Experience on Wednesday, Balchunas said: “Active is alive and well, it’s not dying, it’s just changing forms,” before adding: “We’ve got themes, smart beta, ESG, ETF model portfolios — that’s trading ETFs actively — direct indexing, which I think is a form of active, so it’s really interesting.”
At Pensions & Investments, Kathie O’Donnell is reporting that panelist Matt Hougan, chief investment officer of Bitwise Asset Management, said that passive management’s rise “is definitively making active better,” and that active managers “kind of blew it,” and had “these enormous fees” that could have been lowered.
“I think the undeniable wave of passive has woken up good active managers to that fact, that they need to be more transparent, that they need to be more high-conviction,” Hougan said. “I think the rise of passive has pushed active managers in the right direction.”
Offering Proper Sentiment
The sentiment that active management still has much to offer is shared by many investors and advisors alike. After being on the market for barely two years, investors have become increasingly comfortable with actively managed ETFs, having pumped a net $21.6 billion into these funds in the first quarter (11% of all net flows into ETFs during the period).
Boston-based financial advisor Raj Sharma recently told Barron’s that he believes “this is the golden age of active management,” adding: “Passive management worked when you had a rising tide lifting all boats. Now, you have an environment where you have winners and losers.”
“Advisors have increasingly gained comfort with the expertise active managers can provide with the liquidity and tax efficiency benefits provided by ETFs,” said ETF Trends’ head of research, Todd Rosenbluth. “There remains tremendous room for growth in the years to come.”
T. Rowe Price offers a suite of actively managed ETFs. 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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