Asset managers launching actively managed exchange-traded funds (ETFs) have reason to celebrate this holiday season. Active ETFs attracted a record $257 billion in 2024, double last year’s total, according to Morningstar. This surge accompanies an increase in fund launches, with over 500 new active ETFs debuting in the U.S. through Dec. 5.
Major firms such as Vanguard, BlackRock, Harris Oakmark, and MFS Investment Management have rolled out new active ETFs recently. “It’s a great time for ETFs, and asset managers are increasingly focused on delivering products that meet growing demand,” says Todd Rosenbluth, head of research at VettaFi.
The rising popularity of active ETFs stems from shifting industry dynamics and investor preferences. While mutual funds still hold more assets, ETFs have gained traction due to their transparency, tax efficiency, and tradability. Many financial advisors now use ETF-based model portfolios, enabling streamlined portfolio management and more time for comprehensive financial planning.
The SEC’s 2020 rule changes also made launching ETFs easier, lowering barriers for traditional asset managers. “This change allowed many active managers to enter the ETF market,” says David Sharp, director of Vanguard’s ETF capital markets team.
Asset managers have grown more comfortable with the transparent structure of ETFs, which disclose holdings daily, unlike mutual funds that report quarterly. Concerns about revealing proprietary strategies have diminished as managers recognize the potential for growth in the ETF space. “Daily holdings disclosure is a key difference between ETFs and mutual funds,” says Rosenbluth.
Some long-time mutual fund providers launched active ETFs for the first time this year. MFS Investment Management, credited with creating the first mutual fund a century ago, introduced five actively managed ETFs this week.
Michael Roberge, CEO and chair of MFS, emphasizes meeting evolving investor needs. “Since creating the mutual fund 100 years ago, MFS has continuously adapted to deliver long-term value. These new active ETFs represent the next step in that journey,” he says.
MFS’s ETFs span five key investment areas: U.S. Value, U.S. Growth, International Equity, U.S. Core Plus, and Intermediate Muni Bond. The Boston-based firm manages $636 billion in assets as of Oct. 31. “Offering diverse investment vehicles ensures we remain relevant and meet our clients’ needs,” says Vivian Tung, senior managing director at MFS.
Harris Associates also launched its first active ETF, the Oakmark U.S. Large Cap ETF (OAKM), while other firms continue expanding their ETF offerings. Charles Schwab, which introduced its first ETF in 2009, plans to launch the Schwab Core Bond ETF in 2025, its third active ETF. The firm’s asset management unit oversees more than $1 trillion.
Last month, Fidelity Investments added five actively managed equity ETFs, citing growing interest from investors and advisors. Vanguard, traditionally known for passive index funds, has also expanded its active ETF lineup, introducing two new muni ETFs last month. CEO Salim Ramji has highlighted active fixed-income strategies as a growth focus.
“Our approach has always been to offer active management at low cost,” says Sharp of Vanguard. “Lower expenses mean managers can take less risk to achieve similar returns.”
The current market environment has created fresh opportunities for active strategies, motivating launches like Harris Associates’ new fund. “The S&P 500’s price-to-earnings ratio is 23, while the average stock trades at 16 or 17,” says Bill Nygren, partner and CIO for U.S. equities at Harris. “We see an opportunity to build a diversified portfolio of undervalued companies.”
Harris Oakmark, an affiliate of Natixis Investment Managers founded in 1976, manages $104 billion in assets. Nygren notes that ETFs’ convenience and transparency appeal to a broad range of investors.
Looking ahead, it’s uncertain whether 2025 will match this year’s record-breaking inflows, but asset managers are likely to continue expanding their active ETF offerings.
