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River of Assets Flowing to Active ETFs: Dave Nadig

By Dinah Wisenberg Brin

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Indexed investments may outperform active management in the long term, but inflows into actively managed exchange-traded funds are surging this year.

“We’ve actually seen almost 40% of flows this year come into actively managed product,” Dave Nadig, financial futurist at research and consulting firm VettaFi, told ThinkAdvisor via email Monday.

“That shift into active is significant — under 14% of ETF flows last year were into active product,” he said.

“While historically, active ETFs have been relegated to a few bond offerings, in the past few quarters we’ve been seeing a wide variety of active funds gather assets: I’d highlight JPMorgan’s JEPI and Capital Group’s CGGR as big winners lately,” Nadig said, referring to the JPMorgan Equity Premium Income ETF and the Capital Group Growth ETF.

BlackRock and Vanguard maintain enormous power and assets, he noted. VettaFi’s ETF Issuer League Tables show BlackRock in first place in assets under management, with more than $2.25 trillion, followed by Vanguard, with $1.97 trillion. No other firm has reached $1 trillion in ETF assets under management, according to VettaFi data.

Vanguard leads in three-month fund flow, followed by JPMorgan Chase and Charles Schwab, according to VettaFi.

As for the reason active funds are seeing more inflows this year than last, “the ‘why’ is always tricky, but when we polled advisors recently, 86% said they’re looking to add more to active strategies,” Nadig said.

“It’s clear that recent market volatility has created a real need in the minds of some advisors to have someone at least ‘minding the store,’ even if the long term averages for active managers are still in favor of indexing,” he added.

Eric Balchunas, senior ETF analyst at Bloomberg, noted the trend in a tweet two weeks ago, and said the 14% last year was a record itself. Further, over 500 of the 1,000 active ETFs had seen cash come in so far — “stunning numbers,” especially considering the state they were in five years ago, he added.

 (Image: Adobe)

Dinah Wisenberg Brin

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