The best of both worlds ? This is what a growing number of management companies offering ETFs are promising (exchange traded fundsalso called trackers), financial products that track an index and are continuously listed and actively managed.
These new products are experiencing exponential growth in Europe after having enjoyed success across the Atlantic. “In recent years, many companies operating in the United States have adopted exchange traded funds as the vehicle of choice for marketing their active strategies”we emphasize at Morningstar.
On this side of the Atlantic, at the end of March 2024, investors had access to 87 active ETFs, corresponding to approximately €33.8 billion managed. While the initial growth of this new market coincided with the rise of fixed income strategies, actively managed equity ETFs have grown significantly over the past two years, totaling more than €20 billion. Despite their growth, active ETFs currently constitute a modest segment, representing just 2% of total listed index fund assets in Europe, compared to 6.5% in the United States.
These products represent a growth opportunity for asset managers. “Almost 10% of European ETFs launched in 2023 were actively managed, and their weight in terms of assets increased by almost 50% over the same period,” observes traditional manager Janus Henderson, who has just acquired European ETF provider Tabula Investment Management, whose platform he plans to use to launch a range of new active products.
“The products combine the advantages of traditional active funds – flexibility, potential for outperformance – and ETFs – low costs, transparency and ease of access”argues Stefan Kuhn, head of ETF distribution in Europe at Fidelity International. “The ETF is a revolution whose potential we do not understand. This is the biggest invention in the banking sector since the invention of the ATM! “, enthuses Alfred Le Léon, head of ETF sales for France at JP Morgan Asset Management. “We strongly believe in ETFs and we are known for our active management, which allows us to outperform an index, generate income, or even control duration [plus la duration est élevée, plus le risque est grand]yield or credit quality, when it comes to bond investments,” he explains.
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