Why the popularity of ETFs is good for active management

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Exchange traded funds continue to gain popularity as investors pour more money into the popular investment vehicle. In September, ETFs gained an additional $ 55 billion in inflows, adding to the record pool that had surpassed all last year’s inflows into ETFs at the end of July of this year, said Morningstar reported.

With the rule changes last year that allowed actively semi-transparent ETFs, more and more companies have moved into the market space, converting mutual funds to ETFs and adding their own variations on. the type of popular fund.

ETFs gains were made in the face of extreme economic hardship, with a significant portion of the economy shutting down last year at the start of the ongoing COVID-19 pandemic, but stock markets, which had plummeted of 34% in March of 2020, were up 34% above their pre-COVID levels at the end of August 2021.

Growth has been tremendous and ETFs have reaped the rewards, as has the asset management industry as a whole. In a report by McKinsey and Company, a management consulting firm, 2020 was the second highest year of growth in assets under management (AUM) since the financial crisis, reaching a record high of $ 115 trillion in the world.

North America saw a 13% increase in its assets under management last year and a 2.3% growth in new net flows, a number that far exceeds the new flows of the previous five years. ETFs have been one of the fastest growing types of vehicles, due to the introduction of active semi-transparent ETFs and a variety of other strategies, as well as more and more companies. entering space.

With so many ETFs on the market today, investors increasingly need the guidance and active insight that asset managers can offer, according to the report’s authors. They see ETFs as “a channel for revitalizing active management, driven by investor demand for ease of access, tax efficiency” and advice from seasoned professionals.

Active management firm T. Rowe Price believes in the difference and benefits of active investing and management. The company currently offers eight actively managed ETFs for investors who wish to join the ETF movement by large established companies. The company brings a wealth of experience and research to its products, with portfolio managers averaging over 20 years of investment each, as well as more than 400 investment professionals dedicated to researching companies within ETFs.

For more news, information and strategy, visit Active ETF Channel.


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