Active ETFs Hit Record $1 Trillion in Assets Amid Regulatory Changes and Product Innovation

Actively managed exchange-traded funds (ETFs) worldwide have surged to a record-breaking $1 trillion in assets by the end of August, according to ETFGI data provider. This milestone is largely attributed to simplified regulations and a wave of product innovations.

Active ETFs aim to outperform their indexed benchmarks like the S&P 500, Nasdaq 100, and Russell 1000 Growth Index. Although comprising only 7% of global ETFs, active ETFs have contributed to 30% of total fund inflows over the past few years, noted Matthew Bartolini, head of SPDR Americas Research at State Street Research, in a Reuters interview.

The pivotal growth factor, experts say, was the 2019 “ETF rule,” which streamlined the approval process for active ETFs by the US Securities and Exchange Commission. Since then, active ETF assets have grown tenfold. As of August 31, active ETF assets have surged by 42%, further fueled by relaxed regulations and investor interest in innovative products.

ETFs range widely, from standard options like BlackRock Large Cap Value ETF to niche offerings such as AdvisorShares Vice ETF. However, not all issuers are thriving, with the top 10 firms commanding 75% of active ETF assets. Despite such disparities, more than 90% of ETF investors plan to increase their allocation to active ETFs, according to a Brown Brothers Harriman survey.

(With inputs from agencies.)