##  [# Active ETFs' Glow May Linger in 2024: Morningstar](/sections/news/active-etfs-glow-may-linger-2024-morningstar) 

 

# Active ETFs' Glow May Linger in 2024: Morningstar

 

 

Seeking to beat a market largely concentrated on 7 stocks, fund issuers load up on active strategies.



 

 

 

 

 [![Jeff_Benjamin](/sites/default/files/styles/author_image_icon/public/2023-08/Jeff_Benjamin_author.png?itok=-fUp7EJP "Jeff_Benjamin")](/authors/jeff-benjamin) 

[By Jeff Benjamin](/authors/jeff-benjamin)

 Dec 29, 2023

 Edited by: Mark Nacinovich

 

 

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The bull market run that has been essentially carried along by a concentrated collection of seven stocks raises questions about the sustainability of the rally as we move into the new year.

From there, it’s a short leap over to [actively managed](https://www.etf.com/topics/active-management) strategies and a heavier focus on [alpha](https://www.investopedia.com/terms/a/alpha.asp). Thus, while the poster child of concentrated [beta](https://www.investopedia.com/investing/beta-know-risk/#:~:text=our%20editorial%20policies-,What%20Is%20Beta%3F,they%20deviate%20from%20the%20market.) takes the form of the [**Invesco QQQ Trust (QQQ)**](https://www.etf.com/QQQ), which has gained more than 55% in 2023, ETF issuers are already bracing for the next market cycle.

According to a new report from [Morningstar](https://www.morningstar.com/etfs/6-etf-investing-predictions-2024), strategic beta ETFs hit the skids in 2023 while active strategy ETF launches shot toward the stars.

There were 26 strategic-beta ETF closures in 2023 and just seven launches.

“Fewer ETF issuers are incentivized to launch new and innovative funds in the now-mature strategic-beta ETF market,” Morningstar research analyst Mo’ath Almahasneh wrote.

“Downward fee pressure is pushing smaller providers out of the space, while higher-priced active or alternative ETFs provide new and potentially lucrative opportunities for emerging ETF issuers” he added.

## Active ETFs 

Almahasneh believes this trend will continue in 2024, further reducing the number of strategic-beta ETF launches and possibly increasing the number of closures.

“New money will also be drawn to active and alternative ETFs as alpha-seeking investors are increasingly choosing to allocate to these funds instead,” he wrote.

That outlook is supported by the trend in [active](https://www.etf.com/topics/active) ETF launches in 2023. Fueled by the success of [covered-call ETFs](https://www.etf.com/topics/covered-calls) and defined-outcome exchange-traded funds, issuers launched more than 370 active ETFs during the year.

And if success is measured by asset flows, it would be difficult to dispute the triumph of the $30.6 billion [**JPMorgan Equity Premium Income ETF (JEPI).**](https://www.etf.com/JEPI)

The wildly popular covered-call strategy, which gained nearly 10% in 2023, led all active ETFs during the year with more than $12.8 billion worth of inflows.

*Contact Jeff Benjamin at* [*Jeff.Benjamin@etf.com*](mailto:Jeff.Benjamin@etf.com) *and find him on X at @BenjiWriter*

 
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 [ Jeff Benjamin Wealth Management Editor ](/authors/jeff-benjamin) 

 

 

  Jeff Benjamin is the wealth management editor at etf.com, responsible for coverage related to the financial planning industry. This includes writing,…   [View Bio](/authors/jeff-benjamin)

 



 

 


 Related Topics  [Active Management](http://www.etf.com/topics/active-management) 

 [Covered Call](http://www.etf.com/topics/covered-calls) 

 [Advisor Center](http://www.etf.com/topics/advisor-center-0)