Active ETFs Are Driving Inflows Over $1T Mark

The anticipated strength of December inflows bodes well for ETF flows cresting the record-setting $1 trillion mark by the end of the year.

Aniket Ullal, ETF analyst at CFRA and an etf.com board member, points out that the $943 billion worth of ETF inflows this year through Nov. 22 already exceeds the calendar year record of $911 billion set in 2021.

“Historically, inflows into equity ETFs like the S&P 500 SPDR ETF (SPY) tend to be strong in December, so it seems likely that the inflows into U.S. ETFs could exceed $1 trillion for the first time,” he said.

The index tracking SPY is up 27% from the start of the year, which will fuel investor appetite going into the end of the year. But, as Ullal points out, active strategies have also been stepping up to carry a share of the inflows load.

Through Nov. 22, active ETFs have accounted for 25.4% of ETF inflows in the United States, according to Ullal.

That compares to 14.6% in 2022 and 18.6% last year.

Active ETFs Drive Record Inflows

Ullal said the growing appeal of active ETFs is a “consequence of the changing ETF issuer landscape, since the largest asset gatherers in the active space are different from those in the indexed space.”

“The success of issuers like JP Morgan, Dimensional, and Capital Group in the active ETF space is creating a little more parity at the top of the leaderboard, although the leaders Blackrock and Vanguard still dominate,” he added.

According to CFRA’s data, indexed ETF inflows are still dominated by the biggest names in the ETF space, with the Vanguard Group accounting for 37% of indexed ETF inflows this year, followed by BlackRock Inc. at 31%.

From there, the list follows the standard industry brand names, including Invesco, State Street Global Advisors, Charles Schwab Corp., and Fidelity Investments.

But on the actively managed ETF side, the inflow leaders list is topped by JP Morgan at 15%, Dimensional Fund Advisors at 14%, and Capital Group at 10%.

The growing appeal of active management is in line with the findings from etf.com’s new Global Investor Survey, which found that 75% of financial advisors are somewhat-to-very interested in increasing allocations to actively managed ETFs over the next six months.

Nate Geraci, president of The ETF Store in Overland Park, Kans., said ETF issuers are syncing up with investor demand.

“A primary reason active ETFs are generating so much attention right now is because that’s where issuers are focusing,” he said.