Ark’s Innovation ETF has sparked a surge in actively managed exchange-traded funds, according to a recent article in Bloomberg.
Data compiled by Bloomberg shows that this year, ETF issuers have launched 115 active products versus 51 passive funds—representing the first time active products have surpassed passive, and fueling the $6.5 trillion ETF market toward its “busiest 12 months on record.”
“It’s a comeback of sorts for stock pickers, and in an unlikely corner of Wall Street,” the article reports, noting that most active managers fail to beat their benchmarks. “But a combination of new rules and the enduring popularity of ETFs with investors,” the article reports, “means a slow but major shift is underway.” Those rules made it easier for ETFs to use stock-picking strategies while keeping their exact investment strategies under wraps.
While active funds remain a fraction of the industry (at just 3.4% of the total ETF market), that’s up from 2.7% just a year ago, and the article reports that “large Wall Street firms who long held-out against ETFs are now embracing them”—a sign that the trend could continue. And as new funds emerge, fewer funds are shuddering: According to Bloomberg data, only 19 ETFs have liquidated or delisted so far this year, compared to 104 in the first half of 2020, and 79 during the same period in 2019. Much of that endurance, the article says, “can be attributed to the bull market.”
Invest Using Proven Quantitative Strategies – Risk-Free Trial.
Get a free systematic investing guide, which explains how systematic investing works.
See the stocks part of the S&P 500 and have increased their dividends in each of the past 25 years.