Launches of actively managed exchange-traded vehicles are surging, but their performance is often poor

Published On Oct 15, 2024, 6:00 AM

The article discusses the recent shifts in the ETF market, highlighting a significant increase in both the growth and launch of active ETFs, while also pointing out their underwhelming performance compared to passive ETFs. The increase in active ETF launches, which now outnumber passive ones significantly, comes despite the historical trend where active management often underperformed relative to passive counterparts. Leading asset management firms like BlackRock, Vanguard, and State Street dominate the market with their low-cost passive products. This trend creates a competitive challenge for midsize managers and highlights the importance of cost efficiency in ETF selection for investors. The article emphasizes the need for investors to be cautious with complex active strategies that may not offer substantial benefits over passive investing.