Unlike passive ETFs which aim to track the risk/return profile of their underlying index (S&P 500, EuroStoxx 50, Nikkei 225, etc.) as close as possible, an actively managed ETF is a type of exchange-traded fund in which a portfolio manager or a team of managers make active decisions about the allocations of the fund with the goal of outperforming a benchmark or achieving a specific investment objective. This means the manager of an active ETF uses his/her expertise to select the securities of the portfolio, adjust the portfolio, or react to a changing market environment. Passive ETFs are known for

First of all, it needs to be said that mutual funds and exchange traded funds (ETFs) are collective investment vehicles which are in many jurisdictions regulated within the same regulatory framework. This means both kinds of products are different ways to deliver an investment strategy to the investor. The key differences between a mutual fund and an ETF are related to their product structure, buying and selling of shares, transparency, and fees and expenses: 1. Buying and Selling of Shares The shares of mutual funds are normally bought and sold only once a day, at the fund’s net asset value

When it comes to the advantages of the ETF wrapper compared to a classic mutual fund, the advantages of the ETF wrapper are clear. The ETF can be bought or sold at a fair price during the respective trading hours, while mutual fund investors need to take cut-off times and T+x trading into consideration when buying or selling a mutual fund. This means they won’t know the exact price of their fund shares until the trade is settled. In addition, ETFs seem to be more transparent than a mutual fund, since an ETF does publish its portfolio composition more frequently

The European fund industry enjoyed general inflows over the course of May 2024. These inflows occurred in a positive market environment. The positive investor sentiment was driven by some stronger than expected earnings for Q1 2024. Nevertheless, there were also some companies which didn’t meet the expectations of analysts and saw their stock prices declining. These market reactions on lower-than-expected numbers showed how vulnerable the markets are. In addition, the geopolitical tensions in Middle East—especially the developments around the Red Sea—are still seen as a risk for general economic growth in Western countries since a number of shipping companies these

The European fund industry enjoyed general inflows over the course of April 2024. These inflows occurred in a further unstable market environment since the geopolitical tensions in Middle East increased over the course of the month. Especially the developments around the Red Sea may impact the economies in western countries since a number of shipping companies these days avoid the passage of the Suez channel. It is, therefore, to be expected that the prolonged delivery times will cause some tensions for the still vulnerable delivery chains. Market sentiment was further driven by hopes that central banks—especially the U.S. Federal Reserve—have

For a long time, investors and market observers discussed the issue of active versus passive products as an either or discussion. Many relied on either passive (ETFs) or actively managed investment products (mutual funds) instead of seeing the two investment product types for what they really are—two sides of the same coin! Nowadays, it looks like what belongs together is growing together. Promoters of actively managed mutual funds are discovering the ETF wrapper as a distribution channel and are starting to launch corresponding products. Although this trend has only established itself in the U.S. so far, we have seen various

In the U.S., mutual fund and ETF assets earmarked for funds dedicated to responsible investing (RI, aka ESG, sustainable, socially responsible, or impact investing) practices only accounted for 1.3% (+$371.3 billion) of the assets under management (+$29.225 trillion). Nonetheless, the number of RI offerings continues to grow as investors search for strong risk-adjusted returns while staying true to their ethical, moral, sustainable, and religious convictions. At year’s end, there were 802 ETFs or unique conventional funds (excluding share classes) flagged in Lipper’s database as being committed to RI practices. This means these funds have stated goals of not just considering

Asset managers around the globe face increasing pressure on management fees since the performance of the average active manager is in a number of cases worse than the performance of their passive peers. One reason for this underperformance can be attributed to the level of fees and expenses charged by active managers since the underperformance is often somewhat similar to the total expense ratios of the respective funds. It is, therefore, not surprising that these management fees are under scrutiny and that investors put pressure on active managers to pass over economies of scale by reducing the management fee once

In 2019, U.S. fund investors continued to prefer passively managed funds over actively managed funds. Long-term actively managed funds (excluding money market funds) witnessed net outflows of $83.7 billion for 2019, while their passively managed counterparts took in some $472.1 billion. However, assets under management for long-term funds remain tilted toward actively managed products. At the end of 2019, actively-managed funds accounted for $13.9 trillion under management in the U.S., while their passively managed fund brethren made up $8.4 trillion. Money market funds—$3.5 trillion—comprised the remainder of assets under management in the U.S. fund industry—$25.9 trillion. I know, the headlines