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The rise of active ETFs

  • Understand what is driving the growth of active ETFs
  • Identify the reasons for benefits and challenges of including active ETFs in a portfolio
  • Describe how the active ETF market might develop in the coming years
CPD
Approx.60min
The rise of active ETFs
Active ETFs have surged in popularity in the US, and this is gradually starting to make its way to the UK market (Michael Nagle/Bloomberg)

Introduction

By Damian Fantato

For years, ETFs were used largely to just track an index.

But the ETF structure is increasingly being used by active fund managers - particularly in the US where the market has quadrupled in four years.

This is largely due to regulatory changes, with the US Securities & Exchange Commission recently making it easier to bring ETFs to market.

And growth of the active ETF market has been slower in the UK but there are signs that this trend is making its way across the pond.

In Europe active ETFs make up 2 per cent of the total ETF market, according to Morningstar data, but there are signs of huge growth: by the end of March 2024, the 87 active ETFs now available in Europe had accumulated a £29bn in assets.

So in this latest special report, which is sponsored by JPMorgan and qualifies for 60 minutes of CPD with the CISI, we take a look at active ETFs.

We explore the role they have to play in a portfolio, what is driving the growth of this market, what active ETFs can add to fixed income allocations and what the future holds for this market.

In this guide

CPD
Approx.60min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. What is the reason Harry Rogers of Bentley Reid is cautious about using active ETFs?

  2. Portfolios with active ETFs in them can be more expensive than those which just use funds

  3. Which asset class has seen the most growth in active ETF use recently?

  4. Other than cost, what does Richard Philbin see as an advantage of active ETFs?

  5. Which is NOT one of the factors Myles Bradshaw of JPMorgan uses to run active fixed income ETFs

  6. The tax regime in the UK is friendlier to active ETFs than that in the US

Nearly There…

You have successfully answered all the questions correctly, well done!

You should now know…

  • Understand what is driving the growth of active ETFs
  • Identify the reasons for benefits and challenges of including active ETFs in a portfolio
  • Describe how the active ETF market might develop in the coming years

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