Stay informed with free updates
Simply sign up to the Exchange traded funds myFT Digest — delivered directly to your inbox.
New ETFs are hitting the market at a record pace this year, led by securities overseen by fund managers who decide which stocks to include.
At least 236 ETFs have launched so far in 2024, including 166 actively managed ETFs, according to Morningstar. There were 155 active and passive ETFs combined at the same time in 2023.
The new class of active ETFs come with a range of features, including ones that pay extra income, doubled exposure to certain stocks or guaranteed protection against losses. They are attracting outsize interest and capital from investors.
“While most of the money still resides in low-cost index based broad market ETFs, many of these newer products have gained traction,” said Todd Rosenbluth, head of research for VettaFi, a consultancy.
Capital Group announced on Thursday it is adding seven new active ETFs to its mix of 21 securities with $29bn in market capitalisation. It now holds about 4 per cent of the active ETF market.
Those launches follow a pair of new active ETFs earlier this month from BlackRock. Though the $10tn asset manager is better known for its passive iShares ETFs, it has quietly doubled its active ETF offerings over the past year.
“Active ETFs are becoming an integral part of investor portfolios around the world, with financial advisers increasingly incorporating them into their models-based practice,” Jessica Tan, head of Americas for global product solutions at BlackRock, said in a statement.
Other strategies are intended for more niche uses. A joint venture between REX Shares and Tuttle Capital Management plans to offer dozens of single-stock ETFs that offer bets for and against a range of companies — including Trump Media and meme stock favourites GameStop and AMC Entertainment — at double the normal exposure, according to a recent regulatory filing.
“You are seeing another step on the extinction of mutual funds for ETFs,” said Matt Tuttle, chief executive of his eponymous firm. “The only thing mutual funds have on ETFs is a lead in active strategies.”
The $26tn mutual fund industry is far bigger than the nearly $9tn ETF market in the US. But active ETFs pulled in nearly $100bn through the first five months of 2024 while active mutual funds bled about $150bn, according to Morningstar.
Research from London consultancy ETFGI released Monday found actively managed ETF assets globally reached about $889bn at the end of May, eclipsing April’s record of $840bn. About $662bn of that is in the US, according to Morningstar.
