From Morningstar: 2024-12-02 04:08:27

Active ETFs are gaining momentum in Europe, representing a new trend in asset management. While still a small part of the market, they are rapidly growing, with over 2% of ETF assets. Key advantages include real-time trading, transparency, and cost efficiency, but challenges include capacity risk and lack of daily holdings transparency.

Several asset managers are leading the development of active ETFs in Europe, including JP Morgan, Fidelity, Pimco, and Vanguard. These firms are offering a range of active ETFs, with JP Morgan leading in terms of assets under management. New players are continuously entering the active ETF space, expanding the market.

In 2024, active ETFs with the biggest net inflows in Europe are low-cost equity offerings with limited tracking error and an ESG overlay. These “shy actives” also adopt quantitative or systematic investment processes. Despite their low market share in assets, active ETFs are attracting higher inflows due to new product launches and investor preferences.

The future of active ETFs is expected to bring growth in size and options available, leading to a more complex and competitive landscape. Investors will benefit from more choices but will need to carefully evaluate different strategies and conduct due diligence. The market may see a shift towards more diversified, lower-cost active structures over traditional high-conviction strategies.



Read more at Morningstar: What Are Active ETFs and Why Are They So Popular Now?