Actively managed equity exchange-traded funds notched a 48% organic growth rate last year, according to Morningstar's 2024 Global Fund Flows report, which said the category has been gaining steam since 2020 and shows few signs of slowing.
Assets of actively managed equity ETFs worldwide totaled $342 billion as of Dec. 31 with $287 billion of that residing in the U.S., Morningstar's report said. Overall, actively managed ETFs grew by 37% while indexed, or passive, ETFs grew 8% on an organic basis, the report said.
Organic growth rate is determined by dividing the cumulative flows for a given period by beginning total net assets, according to Syl Flood, a senior product manager at Morningstar and author of the report, who in an interview cited a few reasons for the strong growth rate of actively managed equity ETFs.
"Just first, from the mathematical standpoint, the base they're building (off of) is a lot smaller than passive, because passive, there's just trillions in there," Flood said. "The other reason is that ETFs have become the preferred wrapper for investors over the past several years."
Traditional active managers are now beginning to introduce actively managed ETF versions of their mutual funds or finding new strategies well-suited to the ETF wrapper, he said.
Dimensional Fund Advisors and J.P. Morgan Asset Management dominate when it comes to actively managed equity ETFs, the report said. Together, those two players accounted for eight of the 10-largest U.S. actively managed equity ETFs, Flood said.
At $30.5 billion, the JPMorgan Equity Premium Income ETF topped the list of largest U.S. actively managed equity ETFs. The fund, known by the ticker symbol JEPI, had $12.8 billion of net inflows in 2023, the report showed.
Managers introduced 330 new actively managed equity ETFs in 2023, 149 of which were outside the U.S. That was up from a respective 272 and 148 in 2022, the report said.
