Behind Active ETFs’ Small Victories

May 20, 2019

Other Pockets Of Fixed Income

Outside of cash management tools, issuers have also found good traction in the unconstrained bond ETF space—think ETFs like the SPDR DoubleLine Total Return Tactical ETF (TOTL) and the PIMCO Active Bond ETF (BOND), together commanding about $5.5 billion. Assets have also started flowing increasingly into the muni space.

Here’s a look at the biggest active ETFs and respective flows in the trailing 12 months (May to May):


ETF Giants ($M)

Ticker Fund 12-Mo Net
Flows ($M)
AUM ($M) % of AUM
MINT PIMCO Enhanced Short Maturity Active ETF -74.11 11,761.66 22.17%
JPST JPMorgan Ultra-Short Income ETF 96.08 7,085.65 90.61%
NEAR iShares Short Maturity Bond ETF 45.21 6,228.70 39.70%
FTSM First Trust Enhanced Short Maturity ETF 141.08 4,330.45 52.89%
FPE First Trust Preferred Securities & Income ETF -15.57 3,576.43 2.69%
TOTL SPDR DoubleLine Total Return Tactical ETF 52.76 3,247.95 -1.92%
LMBS First Trust Low Duration Opportunities ETF 0.00 2,713.87 52.20%
EMLP First Trust North American Energy Infrastructure Fund 320.80 2,420.71 0.81%
SRLN SPDR Blackstone / GSO Senior Loan ETF 130.50 2,331.78 -24.93%
BOND PIMCO Active Bond ETF 8.53 2,331.53 49.77%


Magic Of BYOA

The second trend driving adoption of actively managed ETF in recent months is one that doesn’t apply only to active ETFs.

It’s what we call the “bring your own assets” phenomenon: big mutual fund managers creating proprietary ETFs, and reallocating in-house client assets to these ETFs or, at least, making sure their ETFs have some kind of bespoke client when they come to market.

BYOA has meant many newcomer ETFs—a lot of them active—become overnight giants with impressive asset bases and liquidity. J.P. Morgan has been known to do that. The firm is one of the biggest buyers of its own ETFs. John Hancock and Goldman Sachs have done that as well, among others.

This type of asset growth is impressive, but again, it speaks little to the success of active management as a solution. It speaks more to the success of the ETF wrapper itself, as mutual fund giants enter the space to meet client demand.

BYOA has meant asset growth for active, and is therefore another victory for the segment, but it hardly suggests active management has found a footing in the ETF space.

Active ETFs still command only 2% of all U.S.-listed ETF assets.

Organic Success Standouts Outside Fixed Income

That said, there have been some organic successes in active ETFs outside of fixed income, and outside of BYOA. Consider, for instance, the First Trust North American Energy Infrastructure Fund (EMLP).

EMLP is the only equity ETF found among the top 10 largest active ETFs. The fund is one of the only strategies to tackle the master limited partnership (MLP) space through active management, focusing on energy infrastructure.

With $2.4 billion in total assets, EMLP is a complex strategy because, unlike its competitors, the fund can’t allocate more than 25% of its portfolio to MLPs per 1940 Act Fund restrictions, according to FactSet. That means EMLP isn’t purely an MLP play, since it taps into a broader universe of securities.

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