SEI, McKinsey Forecast Astronomical Growth for Active ETFs

ETF Trends

Actively managed exchange traded funds hold a scant percentage of the industry’s total assets under management, but that could change in a big way over the next several years.

Increased demand for the products and the potential for a more favorable regulatory environment could make actively managed ETFs a $500 billion asset class by 2020, according to a new report by SEI Investments.

“Pooneh Baghai, co-leader of McKinsey’s Americas Wealth Management, Asset Management and Retirement Practice, predicts that assets in actively managed exchange-traded funds will explode to $500 billion by 2020, up from $15.2 billion today,” reports ValueWalk, citing SEI.

For the week ending June 13, total AUM for U.S.-listed actively managed ETFs resided at $16.1 billion across almost 90 funds, according to AdvisorShares data.

Led by the PIMCO Total Return ETF (BOND) , PIMCO is the dominant purveyor of actively managed ETFs with $7.8 billion across nine funds, according to AdvisorShares data. WisdomTree (WETF) and Advisorshares are each approaching $2 billion in actively managed ETF assets. First Trust is the only other issuer with over $1 billion in active ETF assets, but helped by the SPDR Blackstone/GSO Senior Loan ETF (SRLN) , State Street (STT) is getting close to having $1 billion in actively managed ETF assets. [State Street, MFS Partner on Active ETFs]

Money managers are coming closer to launching non-transparent actively managed exchange traded funds, with the Securities and Exchange Commission looking over requests from both providers and market exchanges.

Currently, the SEC requires all ETFs, active and passive, to disclose holdings on a daily basis, which has dissuaded some active managers from launching an ETF and revealing their secret sauce to potential front runners. Action on the non-transparent active front could prove to be a major boost for actively managed ETFs in the coming years.

In addition to BOND and SRLN, other successful actively managed ETFs include the AdvisorShares Peritus High Yield ETF (HYLD) , which topped $1 billion in assets under management earlier this year. The WisdomTree Emerging Markets Local Debt Fund (ELD) has almost $850 million in assets while the First Trust North American Energy Infrastructure Fund (EMLP) has $770 million in AUM.

 

ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of BOND and HYLD.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

Rates

View Comments (0)