While mutual funds suffer losses, active ETFs continue to flourish

Morningstar further reports that the far more modest but still-developing active ETF market was able to draw a net US$51.8 billion during the same time period, which is in line with its projected growth rate through 2021. Assets have increased by 1.2% to US$385 billion, even after accounting for market losses.

The demand for active ETFs is holding up even better than that for passive funds, with worldwide flows into passive mutual funds and ETFs in H1 at US$431 billion, less than a third of the total for 2021.

“There has been a general trend away from mutual funds towards equity ETFs more broadly, and active ETFs have very much participated in that move,” Chris Gooch, head of ETF and index sales, Emea at Citi, told the Times.

Elisabeth Kashner, director of global fund analytics at data provider FactSet, said that the rise of these beasts in the US, by far the largest market for active ETFs, was “structural.”

According to Kashner, growth was sparked by the Securities and Exchange Commission’s (SEC) 2019 “ETF rule,” which was intended to increase industry competition by easing the process of bringing ETFs to market.

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