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Active ETFs: Next Big Thing for Fund Managers?


Ever since the highly successful launch of the PIMCO Total Return ETF (BOND) , more and more exchange traded fund providers are clamoring to get in on this relatively untapped frontier.

ETF giants, like iShares , State Street Global Advisors and Invesco PowerShares , have evinced their interest in the actively managed space, reports Jackie Noblett for Ignites. Over the past month, six firms have filed for 23 different active ETFs. [Columbia Management Plans 17 New Active ETFs]

PIMCO’s BOND ETF is the most successful active ETF to have recently launched, garnering over $2 billion in assets since its March launch. Meanwhile, other notable active ETF additions include those provided by AdvisorShares ,Huntington Asset Advisors and SSgA, among others. [ETF Spotlight: Actively Managed Funds]

Nevertheless, the active ETF space only included 54 funds with $7.6 billion in assets as of the end of July, up from $4.7 billion in January, according to Morningstar.

“I think it speaks to the fact that ETF providers are continuing to search for areas of growth,” Robert Goldsborough, an ETF analyst at Morningstar, said in the article.

“There’s certainly more openness to [active ETFs] from a due-diligence standpoint,” Ryan Issakainen, senior VP and ETF strategist at First Trust, said. “There’s a certain level of comfort with them now. That said, I don’t think any more today than a few years ago that people are going to be more interested in the product just because it’s active. It’s more about the investment strategy.”

With the development of active ETFs underway, old mutual fund players, like John Hancock , are also becoming interested in the space. Additionally, Charles Schwab is looking into actively managed ultra-short bond ETFs.

For more information on active funds, visit our actively managed ETFs category.

Max Chen contributed to this article.

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.