Actively managed ETFs have captured 25% of flows in 2024 through June, despite representing just 7% of ETF assets, highlighting investor interest in actively managed strategies, according to a Morningstar report.
The report has found that actively managed ETFs have shown impressive growth, with assets reaching a record $889 billion, up from $714 billion at the start of the year. These ETFs grew organically at a 20% rate, far outpacing the 3% organic growth rate of passive ETFs. Notably, fund groups outside the largest ten providers are leveraging actively managed strategies to attract investors, securing $110 billion of their $157 billion year-to-date flows from active ETFs.
Active ETF growth outpaces passive counterparts
iShares, a prominent player in the ETF market, experienced record monthly global flows in June, amounting to $57 billion. This surge eclipsed their previous record of $43 billion set in November 2023. A substantial 80% of these flows came from US-domiciled vehicles, with 16% from Ireland, and the remainder from nine other domiciles.
BlackRock’s DYNF emerged as the leader in actively managed ETF flows, with $8 billion. Meanwhile, the Vanguard S&P 500 ETF achieved $43 billion in inflows, marking its highest six-month tally in history and bringing its total assets to $472 billion.
JPMorgan led all providers in actively managed ETF inflows with $23.2 billion, $8 billion of which came from just eight of their 179 actively managed ETFs. Remarkably, only 20 of the 430 actively managed ETF providers experienced outflows in the first half of the year.
The equity category, holding 51% of assets, continues to dominate, although its future depends on market conditions. Without US spot bitcoin flows, the alternative category would be in net outflows for the year.
Active ETFs are on the Rise in Europe and America, data shows
The ETF market’s landscape is evolving, with new products in 2024 reflecting the maturity levels of different markets. In the US, most new funds are actively managed, while in Europe, particularly in Ireland and Luxembourg, product innovation remains focused on passive strategies.
Syl Flood, senior product manager, Morningstar, commented: “The popularity of the active ETF approach in North America is very clear to see. US active managers have seen immense interest in these products so far in 2024 and the direction of travel, at the moment, only appears to be one way. In the meantime, though, passive ETFs continue to collect their normal billions, but active strategies is where the action is.
iShares had its greatest monthly flows ever. In fact, it has only had two quarters with outflows since 2008, and those outflows were very small. Its strong growth can be attributed, in part, to its prevalence in the model portfolios being utilised by financial advisers in the US — including those iShares constructs and markets itself.”
