Active ETF Assets Surge Past $1T Milestone

Actively managed ETF assets listed globally reached a new milestone of $1 trillion at the end of September, marking a dramatic shift in how investment products are delivered to investors, according to data from ETFGI, a London-based research and consulting firm.

The growth represents a nearly 43% increase from $737.06 billion at the end of 2023, ETFGI reported.

Year-to-date net inflows reached $240 billion, more than double the $114 billion seen in the same period last year, according to the ETFGI report.

Global growth in assets invested in Actively managed ETFs at end of September

Source: ETFGI

“There are many investors now who prefer to do all their investing through the ETF wrapper, in the U.S. especially. When there are ETFs available, they will buy them over mutual funds.” Deborah Fuhr, managing partner and founder at ETFGI, told etf.com. “We also have seen the conversion of SMAs [separately managed accounts], mutual funds, hedge fund, private funds, into ETFs.

The surge reflects a maturing market where more products have established three-year track records and reached $100 million in assets, making them easier for investors to embrace, according to Fuhr, who is also a member of the etf.com Editorial Advisory Board.

Active Management Evolution

Notably, only 52 of 1,659 actively managed ETFs in the U.S. use semi-transparent or non-transparent models, accounting for just $14 billion in assets, the ETFGI report showed.

“For so many years, active asset managers said they didn't want to do ETFs, and they would consider it if they could do semi or non-transparent. And clearly that’s no longer the case,” Fuhr said.

Fixed income active ETFs gathered $86.36 billion in net inflows year-to-date, compared to $36.2 billion in the same period last year, according to ETFGI data.

The preference for active management in fixed income stems from index complexity, Fuhr explained.

“Many of the fixed income indices are not really something you would ever try to replicate, because they have thousands of bonds,” she noted. “The ability to actually access all those bonds is very difficult or impossible. You do find that in the fixed income space, active management has been embraced for a very, very long time”

The BlackRock Flexible Income ETF (BINC) led individual ETF flows in September with $1.6 billion in net inflows, the ETFGI report showed. The JPMorgan Global Select Equity ETF (JGLO) followed with $967 million in inflows, while the JPMorgan Ultra-Short Income ETF (JPST) saw inflows of $782 million.

At the end of September, the global active ETF industry included 2,962 ETFs from 485 providers listed on 37 exchanges across 29 counties, according to ETFGI data.