Social Sharing
Extended Viewer
Unpacking Active ETFs
Sep 6, 2024
We present a transparent, risk-based framework for asset allocators, including wealth managers, to use in evaluating the active-ETF market, an emerging yet rapidly expanding market segment, particularly in the U.S., where growth has been driven by the conversion of mutual funds into active ETFs. Our framework can help distinguish genuinely active strategies from enhanced indexing.
We focused on active equity ETFs with a U.S. geographical focus. Currently, the market shows a polarized distribution, with an ETF either highly concentrated or broadly diversified.
Active ETFs can be strategically integrated with market-beta and indexed strategies to potentially improve portfolio outcomes while managing specific risks, offering valuable insights for asset allocators navigating this growing market.
Active ETFs varied in their level of diversification and AUM
Data as of May 31, 2024. Bubble size represents the ETF’s AUM. The sample consisted of 301 active equity ETFs with a U.S. geographical focus, including 25 converted from a mutual fund. Source: Lipper, Morningstar
Download report
Research authors
- Ashish Lodh, Executive Director, MSCI Research
- Rohit Gupta, Vice President, MSCI Research
Related content
Wealth Managers
From off-the-shelf models, static tools and spreadsheets, today’s wealth management technology is built for the past. At MSCI, our tools are designed for the future of wealth management, with technology built to maximize your time, effectiveness and client outcomes.
Explore moreThe Power of Rules: Model Portfolios and Wealth Management
For wealth managers and financial advisers seeking customized solutions to meet growing client demand, rules-based management approaches for model portfolios may offer opportunities to improve on traditional management approaches.
Find out moreMeasuring Tax Alpha
The concept of tax alpha can help a wealth manager explain a client’s after-tax performance. In a new article in the Journal of Wealth Management, we propose two frameworks for the after-tax calculation used to measure tax alpha.
Read the report