Taking a look at the shares outstanding shows that passive management fund ownership in the U.S. markets have fallen from 21.3% last year to 20.1% this year, reported Bloomberg. Strategists at Jefferies have been tracking market shares for six years, and this is the first time that there has been a decline in passive ownership within stock markets.

This shift towards active management ownership is in large part thanks to a booming IPO market this year, with active funds participating in the record initial and secondary offerings being offered while their passive counterparts typically delay in investing.

The week following Labor Day in the U.S. saw the most activity for IPOs in nearly two months, with over $25 billion in initial and secondary offerings alone. Overall, Bloomberg found that roughly $600 billion has been raised in IPOs in the past year,

“An IPO has to be in a benchmark” for a passive fund to invest in it, Steven DeSanctis, a Jefferies strategist, explained over phone to Bloomberg. “So who actually owns it? It’s going to be institutional clients, and then the retail investors have become far more involved in trading stocks these days.”

It’s a shift that makes sense to Todd Rosenbluth, head of ETF and mutual fund research at CFRA. Due to the fact that indexes typically rebalance quarterly at most, and most benchmarks will not include stocks that do not have an established track record, passive funds often sit on the sidelines for a bit.

Passive funds are typically “tracking indexes that usually wait a while before adding a new issuance,” Rosenbluth said. “It’s reasonable to think strong new stock issuance is a contributing factor.”

ETF ownership has also been on the rise, according to Jefferies strategists; greater than half of the 13.2% of outstanding shares owned by passive management are in ETFs, up from 6.7% the previous year. ETF assets have grown 53% in the last year, according to Jefferies strategist Steven DeSanctis and Eric Lockenvitz, a growth that reflects flows and price appreciations.

“Better performance suggests potential inflows into active strategies going forward,” a team led by Savita Subramanian wrote. “Concurrent with better performance, active outflows have already slowed significantly — this year is tracking the lowest percentage of outflows since 2014.”

T. Rowe Price believes in the difference and benefits to active investing and active management. The firm currently offers five actively managed ETFs for investors that 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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