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The investing world has been witnessing tectonic shifts for the past few years with changing global economic fundamentals. Investors’ sentiment is now not the same as it was just after the financial meltdown in 2008, at the time of the Eurozone debt crisis, and during the peak of the COVID-19 crisis.
Earlier, the investing domain used to be dominated by passively managed or index-tracking funds. Their low cost and transparent structure have made them highly coveted. But the changing investing backdrop has forced ETF issuers to become more agile.
Agreed, active funds are arguably expensive, as these involve research expenses associated with the manager’s due diligence and additional costs in the form of a wide bid/ask spread beyond the expense ratio. But issuers are still turning more innovative and intend to come up with products that are more dynamic and suit the current improving but volatile market conditions.
Inside The Growth of Active ETFs
Portfolio managers have poured money into the active sector for 50 successive months, after a $22 billion allocation in May, per Bloomberg. Per State Street Corp., the third-largest ETF manager, actively-managed ETFs appear all set to amass a record-breaking $260 billion this year, almost double from last year’s $140 billion.
At the current level, active ETFs have carved a significant niche within the U.S. market, boasting total assets of $684.5 billion across 1,479 products. The average expense ratio is 0.71%. Active ETFs have experienced significant growth in recent years, consistently attracting a minimum of $25 billion in assets annually since 2018, with an impressive organic growth rate exceeding 30% each year, per Morningstar.
While active funds have hauled in about $107 billion this year until early June, or 32% of all ETF flows, they still make up a small share of 7% of the roughly $9 trillion in total ETF assets, Bloomberg data revealed. But the future trend looks bright. Morningstar Direct expects the total number of actively-managed ETF offerings to top passive ones in the next three to five years, as quoted on Bloomberg.
ETFs in Focus
Against this backdrop, below we highlight a few winning active ETFs of the first half of 2024. These ETFs topped the S&P 500 this year (up 14.2%) and the Nasdaq Composite (up 16.6%).
First Trust SkyBridge Crypto Industry and Digital Economy ETF (CRPT - Free Report) ) – Up 36.4%
The fund, which has an asset base of $63 billion, offers exposure to crypto industry and digital economy companies. MicroStrategy (19.45%), Coinbase Global (18.9%), Galaxy Digital Holdings (12.27%) and Marathon Digital Holdings (11.04%) fold the top four positions in the fund. It charges 85 bps in fees.
Who doesn’t know about the pure-play Magnificent Seven ETF MAGS.The fund has a good asset base of $446.0 billion. The fund charges 29 bps in fees and yields of 0.33%.
Fidelity Blue Chip Growth ETF (FBCG - Free Report) ) – Up 27.6%
The fund has an asset base of $446.0 billion. Like most others, this one is also heavy on “Mag 7” with 50% of its assets invested in the top five-holdings that comprise NVIDIA, MSFT, AMZN, AAPL, GOOGL and META. The fund charges 59 bps in fees.
The ProShares Ether Strategy ETF looks to track the performance of ether. It is the first ETF that targets the performance of ether. The fund has an asset base of $106.0 billion. The fund charges 95 bps in fees and yields 7.54% annually.
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4 Top-Performing Active ETFs of 1H
The investing world has been witnessing tectonic shifts for the past few years with changing global economic fundamentals. Investors’ sentiment is now not the same as it was just after the financial meltdown in 2008, at the time of the Eurozone debt crisis, and during the peak of the COVID-19 crisis.
Earlier, the investing domain used to be dominated by passively managed or index-tracking funds. Their low cost and transparent structure have made them highly coveted. But the changing investing backdrop has forced ETF issuers to become more agile.
Agreed, active funds are arguably expensive, as these involve research expenses associated with the manager’s due diligence and additional costs in the form of a wide bid/ask spread beyond the expense ratio. But issuers are still turning more innovative and intend to come up with products that are more dynamic and suit the current improving but volatile market conditions.
Inside The Growth of Active ETFs
Portfolio managers have poured money into the active sector for 50 successive months, after a $22 billion allocation in May, per Bloomberg. Per State Street Corp., the third-largest ETF manager, actively-managed ETFs appear all set to amass a record-breaking $260 billion this year, almost double from last year’s $140 billion.
At the current level, active ETFs have carved a significant niche within the U.S. market, boasting total assets of $684.5 billion across 1,479 products. The average expense ratio is 0.71%. Active ETFs have experienced significant growth in recent years, consistently attracting a minimum of $25 billion in assets annually since 2018, with an impressive organic growth rate exceeding 30% each year, per Morningstar.
While active funds have hauled in about $107 billion this year until early June, or 32% of all ETF flows, they still make up a small share of 7% of the roughly $9 trillion in total ETF assets, Bloomberg data revealed. But the future trend looks bright. Morningstar Direct expects the total number of actively-managed ETF offerings to top passive ones in the next three to five years, as quoted on Bloomberg.
ETFs in Focus
Against this backdrop, below we highlight a few winning active ETFs of the first half of 2024. These ETFs topped the S&P 500 this year (up 14.2%) and the Nasdaq Composite (up 16.6%).
First Trust SkyBridge Crypto Industry and Digital Economy ETF (CRPT - Free Report) ) – Up 36.4%
The fund, which has an asset base of $63 billion, offers exposure to crypto industry and digital economy companies. MicroStrategy (19.45%), Coinbase Global (18.9%), Galaxy Digital Holdings (12.27%) and Marathon Digital Holdings (11.04%) fold the top four positions in the fund. It charges 85 bps in fees.
Roundhill Magnificent Seven ETF (MAGS - Free Report) ) – Up 34%
Who doesn’t know about the pure-play Magnificent Seven ETF MAGS.The fund has a good asset base of $446.0 billion. The fund charges 29 bps in fees and yields of 0.33%.
Fidelity Blue Chip Growth ETF (FBCG - Free Report) ) – Up 27.6%
The fund has an asset base of $446.0 billion. Like most others, this one is also heavy on “Mag 7” with 50% of its assets invested in the top five-holdings that comprise NVIDIA, MSFT, AMZN, AAPL, GOOGL and META. The fund charges 59 bps in fees.
ProShares Ether Strategy ETF (EETH - Free Report) ) – Up 24.2%
The ProShares Ether Strategy ETF looks to track the performance of ether. It is the first ETF that targets the performance of ether. The fund has an asset base of $106.0 billion. The fund charges 95 bps in fees and yields 7.54% annually.