Actively managed exchange-traded funds (ETFs) are a growing part of the market and fixed income is a “big part of that”.
This is what Franklin Templeton head of European fixed income David Zahn told Money Marketing.
Zahn added that the active ETF market is growing in both the US and Europe.
Franklin Templeton ETF Distribution UK, Lotfi Ladjemi, agreed that active ETF market in Europe is “rapidly expanding” even though it “accounts for a modest 2% of total ETF assets in Europe”.
Ladjemi said: “This growth is expected to continue, driven by the inherent benefits of the ETF vehicle, such as transparency, lower costs and rising investor interest.
“Active ETFs offer complete transparency of holdings, lower barriers to entry and ease of access, making them increasingly popular among investors and digital platforms adopting ETFs as their vehicle of choice.”
Ladjemi explained that there are 87 active ETFs in Europe with €33.8bn in assets as of March 31 2024.
Franklin Templeton was an early adopter of active ETFs, according to Ladjemi, and is a “top ten provider of active ETFs, with investor demand for strategies such as the Sustainable Green Bond ETF and the European Short Maturity ETF, having increased as investors seek greater optionality in their fixed income holdings”.
In July 2024, Morningstar Global ETF Flows report said actively managed ETFs grew organically by 20% while passive ETFs only grew 3% for the first half of 2024.
It added actively managed ETFs captured 25% of flows despite representing just 7% of ETF assets.
In total, actively managed assets grew to a record $889bn after starting the year with $714bn.
BlackRock’s DYNF had the greatest flows of any actively managed ETF, hitting $8bn.
Additionally, Vanguard S&P500 ETF had $43bn of inflows, its greatest six-month tally in its history.
Only 20 of 430 actively managed ETF providers had outflows in the first half of the year.
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