2023 was a strong year for active investing, but just how good a year was it? The start of 2024 invites investors to take a look back at active’s 2023 and see the metrics by which they may want to assess active in the new year.
It can be helpful to start off with flows, of course. In raw flows, active ETFs added $131 billion, a new record. That total represents more than one-fifth of all flows for ETFs, despite active ETFs only reaching 6.5% of total AUM. So, while active investing in the ETF vehicle has a long way to go before reaching passive’s trillions, it has made serious progress.
See more: “How Active Investing Boosts the Overall Economy“
In terms of launches, roughly 75% of funds that debuted in 2023 were active. That represents one of the highest tallies since actives’ first big year amid the thematics craze. With so many ETFs already out there, that active investing demand was so high it drove many launches, which should indicate the key role actives can play moving forward.
What kind of active investing strategies might drive flows this year, then? Last year, big income-focused ETFs in the active space saw significant flows. “Core”-type active strategies also added flows as investors looked for approaches that aim to replicate an index with an added active view.
Active Investing Strategies in 2024
This year, with the shifting fixed income situation, active fixed income could play a bigger role and see the flows to boot. More specific equity slices could benefit from active investing this year, too, as the lagging impact of 2023’s rate hikes starts to really hit. Whereas more core-focused actives saw big flows last year, investors may seek the expertise active managers can bring to segments like small-caps, for example.
T. Rowe Price offers a suite of active strategies such as the T. Rowe Price Capital Appreciation Equity ETF (TCAF), which may appeal. The strategy has added more than $130 million in flows over the last month alone, per VettaFi data.
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