It’s been a huge year for the ETF industry with the launch of a record number of new funds, record asset flows and some of the biggest companies converting their mutual fund strategies to ETFs for the first time. The year saw a lot of outperformance for indices in the first half of the year, but as volatility increased the appeal of active management continued to grow with the launch of increasingly active ETFs and more flows coming in. to actively managed funds, reports Barrons.
ETFs have raised more than $900 billion in new money this year, breaking last year’s record of $500 billion at the end of the summer. A record 450 new ETFs were also launched this year, and it was the second consecutive year that more ETFs were launched than mutual funds. The ETF industry currently has approximately $7 trillion in assets under management, compared to $20 trillion in mutual funds; at this rate of growth, ETFs are poised to overtake the mutual fund market, especially as more and more mutual funds convert to the tax-efficient ETF envelope.
The one thing ETFs more consistently align with mutual funds on is the preference for active management by advisors and investors. Of the 450 new ETFs launched this year, nearly two-thirds were actively managed funds.
Advisors and investors are turning to actively managed funds as market volatility and uncertainty continue to be major concerns. Between the introduction of the Omicron threat and central bank regulatory changes, markets have been in turmoil in the second half of 2021. Volatility is the type of environment in which stock pickers and active management should shine, with active funds managers constantly monitor and react to changing market conditions as they occur.
T. Rowe Price is one of the leading active management companies and launched four new ETFs during the year. the T. Rowe Price US Equity Research ETF (TSPA) launched in June, followed by T. Rowe Price Total Return ETF (TOTR)the T. Rowe Price QM US Bond ETF (TAGG)and the T. Rowe Price Ultra Short-Term Bond ETF (TBUX)all of which launched in September.
The company brings a wealth of experience and research to its products, with portfolio managers averaging more than 20 years of investment experience each, as well as more than 400 investment professionals dedicated to research. of companies within ETFs.
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