Surprising Growth in Active ETFs (2:30)

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Dodd Kittsley:

The impressive growth and widespread investor adoption and using actively managed ETFs is nothing short of amazing. In fact ETFs, active ETFs have accounted for one out of every $4 allocated to the overall ETF industry. This year and active ETFs now account for 8% of the $10 trillion industry of ETFs at large.

So they are certainly punching above their weight. There's a lot of things kind of behind these trends. I'd say the first is really conventional wisdom going through a shift from myth to reality.
And what I mean by that is years ago, most people thought of ETFs synonymous with indexing. And that's no longer the case.

What ETFs are truly about, and where the light bulb went on, is ETFs are about providing more efficient exposures. And those exposures can be indexes, they can be market segments.
And in the case of what we're seeing right now and where we've seen a proliferation of strategies is an active strategies.

The second reason we're seeing so much growth is the proliferation of products. So there are now over 1600 actively managed ETFs. That accounts for 44% of the entire industry. That's shocking for a lot of people. Again, ETFs are punching above their weight because they only have 8% market share, but their growth is really been amazing because you have available compelling products out there and people are recognizing that they were.

I say the final thing really is that with any new product, with any new platform, you don't see success on day one. There's no such thing is overnight success. So we needed this track record from when the first actively-managed ETF started, first actively-managed ETFs that Davis started in 2017, based on strategies that have existed for decades. We needed that as a real proof point that ETFs could deliver the value that they purport to do. And they have. And they have in such an impressive way from a tax efficiency perspective for providing added transparency, Flexibility for advisors from a trading perspective, they really have delivered and gone through some different market cycles where they've proved themselves.

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