Actively managed ETFs are very popular, and US ETFs are expected to attract over $1 trillion in funds this year!
According to data from Dow Jones Global Investment, actively managed bond ETFs attracted a total of $41 billion in the first half of the year, exceeding the record of $33 billion for the entire year of 2023. Some analysts believe that if the Federal Reserve cuts interest rates at the end of the year and drives the "Santa Claus rally" in December, the overall ETF market size in the United States is expected to exceed $1 trillion
Investors are pouring into actively managed ETFs, especially selected bond ETFs.
According to data released by State Street Global Advisors (SSGA) this week, actively managed bond ETFs attracted $7 billion in fund inflows in June, accumulating $41 billion in the first half of the year, surpassing the full-year record of $33 billion in 2023.
Matt Bartolini, Head of SPDR Americas Research at SSGA, stated, "The trend of investors favoring actively managed bond ETFs is strengthening. As these ETFs establish longer track records, they will attract more investor interest."
The popularity of actively managed ETFs is also benefiting the overall ETF market in the United States.
According to SSGA's data, the overall ETF market in the United States attracted over $80 billion in fund inflows in June, accumulating $411 billion in the first six months of the year.
Following this trend, Bartolini mentioned that fund inflows into the overall ETF market in the United States will be even higher in the second half of the year, as ETFs typically rebalance towards year-end for tax purposes. It is expected that the U.S. ETF industry will attract $1 trillion in funds in 2024, surpassing the record of $911 billion set in 2021.
"If the Federal Reserve cuts interest rates at the end of the year and drives the 'Santa Claus rally' in December, the likelihood of the ETF market surpassing $1 trillion will increase."
Why actively managed ETFs?
When most investors think of ETFs, they think of passive stock investment strategies like index tracking. Companies like SSGA, Vanguard, and BlackRock dominate this area, holding a large share of the passive investment market.
However, with the Securities and Exchange Commission's rule changes for ETFs in 2019, simplifying the process of launching new ETFs, and the increased interest in ETFs from retail investors (especially young investors), actively managed ETFs, especially bond ETFs, have become increasingly attractive.
On the other hand, the management fees for actively managed ETFs are higher than those for passive ETFs, which has also stimulated fund managers to issue actively managed ETFs.
According to data from the Investment Company Institute (ICI), the average fees for actively managed ETFs are about three times higher than those for passive ETFs, benefiting fund managers from actively managed products