From Yahoo Finance: 2025-06-12 19:15:00

Active ETFs that raise over $100 million in their first year typically grow to over $1 billion by year three, while those raising less struggle to reach $200 million, per a report from Broadridge Financial Solutions, Inc. Early momentum is crucial in the rapidly growing active ETF market, which has expanded from $81 billion in 2019 to $631 billion in 2024.

Success in active ETFs heavily relies on first-year asset accumulation, with only 11% of funds reaching the $100 million threshold associated with long-term growth, based on an analysis of 814 active ETFs with at least three-year track records. Concentration among top managers poses challenges for new entrants, with the top three managers controlling 48% of active ETF assets and the top 10 controlling 77%.

Top managers in the active ETF market share common traits of hitting the ground running, according to the report. Despite concentration levels declining from 90% in 2019 to 77% in 2024 among the top 10 managers, active mutual fund concentration remains steady at 56% during the same period. Three strategic approaches identified for managers seeking to achieve “escape velocity” include distribution through registered investment advisor channels, which hold 61% of active ETF assets.

Broker-dealer and wirehouse channels present higher barriers due to compliance restrictions, making RIA channels the primary entry point for new funds. Successful managers leverage specialized investment styles, proprietary distribution channels, or strong brand identity. JPMorgan Asset Management stands out in hitting all three categories, accounting for 9% of active ETF assets.

High-potential advisors who already use active ETFs are key targets for successful conversion rates and gross sales. Active ETF adoption varies across distribution channels, with RIA platforms showing 6.8% active ETF penetration compared to 2.9% for wirehouses and 2.5% for broker-dealers. Inflow percentages exceed asset percentages across all channels, indicating active ETFs are gaining market share.



Read more at Yahoo Finance: Active ETFs Need $100M First Year for Long-Term Success