After being ignored for years, actively managed ETFs are experiencing a renewed interest from investors.
A report from Morningstar shows that after active funds of all stripes experienced net outflows from 2015 to 2020, active ETFs saw $87 billion in inflows in 2021, with the total amount of money in active ETFs growing by 44% to $295 billion.
And while representing only 2% of all active funds, ETFs accounted for 35% of active fund inflows in 2021. Plus, although only 4% of ETFs are actively managed, they attracted 10% of the $902 billion of inflows that ETFs saw last year.
In the article, Morningstar’s director of global exchange traded fund research Ben Johnson cites “a host of different factors that drove flows toward active ETFs last year,” including increased inflation, the Federal Reserve being expected to raise rates, and “popular new launches.”
According to Morningstar, the largest active ETFs as of December 31 were the $30.42 billion Grayscale Bitcoin Trust (GBTC), the $18.46 billion JPMorgan Ultra-Short Income ETF (JPST), and the $16.19 billion ARK Innovation ETF (NYSEArca: ARKK).
Image source: Morningstar
GBTC, which offers retail investors a way to gain exposure to bitcoin and is trying for conversion to an ETF, grew by 10.9% in 2021.
JPST seeks to provide current income while seeking to maintain a low volatility of principal. The fund invests in investment-grade, U.S. dollar-denominated short-term fixed, variable, and floating rate debt.
And despite its losses, ARKK had net inflows of $4.6 billion, increasing its assets under management by 26%. ARKK invests in companies poised to profit from “disruptive innovation” like artificial intelligence, DNA technologies, energy innovation, automation, financial technology, and the increased use of cloud computing.
Among the fastest growing actively managed ETFs, the SPDR Blackstone Senior Loan ETF (SRLN) tops the list, bringing in $6.76 billion in net inflows in 2021; followed by the JPMorgan Equity Premium Income ETF (JEPI), experiencing $5.45 billion in inflows; and ARKK, raking in $4.56 billion.
Image source: Morningstar
SRLN invests in senior loans given to businesses both operating in North America and outside of North America.
JEPI generates income by selling options on U.S. large-cap stocks. The fund invests in S&P 500 stocks that exhibit low volatility and value characteristics and sells options on those stocks to generate additional income
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