Numbers Don’t Lie: The Continued Case for Active ETFs | ETF Trends

It’s been a blockbuster year for exchange traded funds; ETFs brought in another $73.1 billion in new money in November, bringing the total to $793.6 billion year-to-date, reported Morningstar.

Among ETFs that performed decently amidst uncertain markets and an abrupt pullback with the introduction of Omicron at the end of the month were tech stocks related to semiconductors, ETFs with broad diversification, U.S. large-value funds, and bond funds.

In November, active ETFs managed to bring in $6.2 billion of new money for the month, bringing the yearly total to $81.1 billion. At first glance, it doesn’t sound nearly as impressive as the flows into other categories, but active fund growth is rising.

Active ETFs have demonstrated a 28.8% organic growth rate since December 2020 compared to passive ETFs, which have grown 11% over the same period. While active ETFs make up 4% of the ETF market in the U.S. by market cap, new introductions this year might tip their market share further. As of the end of November, 236 active ETFs have launched this year in comparison to just 136 index ETFs.

Overall, equity ETFs garnered $56.5 billion in new money in November; three out of the last four months have brought in at least $50 billion into stock ETFs. Blended funds both within the U.S. and foreign have been the main driver of growth for the category, making up 40% of ETF inflows into stock funds year-to-date.

A Triple Play

Flows into inflation-protected bond funds have almost tripled their annual amount compared to last year; so far for the year, there have been $38.5 billion in inflows, compared to just $13 billion last year. With inflation continuing to sit at historic highs, flows into these funds are expected to continue to experience growth.

Corporate and long-term government bonds both performed positively last month, hitting the top ten spots in fund flows for the month. Corporate bond funds brought in $1.6 billion for November, while long-term government bond funds gained $3.4 billion in flows. While they have been down most of the year, last month marked a major turnaround for these bond types.

Active management firm T. Rowe Price offers eight different actively managed ETFs with a variety of investment strategies within equities as well as bonds. The T. Rowe Price Equity Income ETF (TEQI) and the T. Rowe Price U.S. Equity Research ETF (TSPA) are among the actively managed funds for investors looking for exposure to equities. Within the bond space, options include the T. Rowe Price QM U.S. Bond ETF (TAGG) and the T. Rowe Price Ultra Short-Term Bond ETF (TBUX).

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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