The first half of the year has been all about actives. Now, investors have the numbers to prove it.
Active ETF launches and inflows hit record highs in the first half of the year, according to a recent Morningstar report. Increasingly complex strategies — like derivative income and collateralized loan obligation funds — are becoming more popular amid ongoing market turbulence, and continue to eat away at mutual fund market share. Active fixed-income ETFs were also favored by investors.
“We’ve seen a lot of interest in active bond ETFs, particularly from big managers like Vanguard, [who] make it very clear that they plan to compete actively in the active bond space,” said Aniket Ullal, head of ETF research at CFRA. “So we expect a lot more growth there.”
Taking An Active Role
There have also been 297 active ETF launches so far this year, with firms like Capital Group, JPMorgan, and T. Rowe Price continuing to build out offerings. Active strategies collectively took in $183 billion in assets, per the report, with derivative income, large blend, and ultrashort bond strategies seeing the most inflows. There was also a jump in the number of ETFs with small- and mid-cap holdings, a trend to look out for, said Stephen Welch, research analyst at Morningstar and author of the report. “That’s obviously a place where capacity matters, so it’d be interesting if there’s uptake there, and if firms continue to launch in that area,” he said.
The top-performing funds of H1 2025 in terms of net flows were:
- The JPMorgan Nasdaq Equity Premium Inc ETF (JEPQ), which brought in $7.8 billion in assets and is up 2.45% year-to-date.
- The Janus Henderson AAA CLO ETF (JAAA), which attracted $5.2 billion and is up 2.6% year-to-date.
- The iShares U.S. Thematic Rotation ActiveETF (THRO), which saw $4.5 billion in inflows and is up 6.1% year-to-date.
The large-blend, ultrashort bond, derivative-income, and large-value categories accounted for roughly half of all active ETF flows so far this year. Still, buffer ETFs, a recent addition to the space, accounted for more than 100 active fund launches in the past six months.
Call of Duty. Covered call strategies are another major category to keep an eye on, said Ullal, exemplified by the popularity — especially among older investors nearing retirement — of products like JPMorgan’s JEPQ. “If you look at those strategies, they tend to underperform in a very rapidly rising market, if you’re writing call options on equities,” he said. “But in a market that’s declining or going sideways, it’s an effective strategy to generate income.”