The Growth of Active vs. Passive ETF After 5 Years
We are updating our Active ETF to index ETF growth comparison. After 5 years since the inception of actively managed ETFs, active ETFs continue to grow at a faster rate than index ETFs when compared to their first 5 years in the market.
While, active ETFs benefit from the education that index ETFs have provided, index ETFs in their early inception where most targeted at institutions which traditionally are early adopters and can invest significant amounts of capital. Active ETFs have mostly been adopted by the retail channel through fee based financial advisors who understand the benefits of active management, but also desire the benefits of the ETF structure which include intra-day liquidity, better trading (risk) control (limit orders), transparency, and a more operationally efficient structure that reduces operational expense and can be more tax efficient.