The U.S. active ETF boom is now more than just billion-dollar blockbusters from the most prominent asset managers. Increasingly, smaller funds are building quietly. These agile, sub-$200 million strategies often go unnoticed, yet they combine the prestige of storied mutual fund franchises with tax advantages and economies of the ETF wrapper.
JGRW ETF can benefit from the popularity of active ETFs. Check its live prices here.
Morningstar statistics revealed the extent of the trend. In July, inflows into U.S.-listed active ETFs reached a record high for the month, $44.8 billion. Market share of total ETF assets by active ETFs crossed the 10% threshold for the first time. Active ETFs have accounted for 31% of all ETF inflows over the past 12 months through July, despite still making up a minority of the $7 trillion-plus in market assets.
Four Funds to Watch
Among the smaller players well-positioned to gain are funds such as the Jensen Quality Growth ETF JGRW, which invests in high-quality, wide-moat companies and has historically performed well during market downturns. At just $68 million in assets, it’s a far cry from its mutual fund cousin, but its consistent approach could be attractive to those seeking stability.
The JPMorgan International Growth ETF JIG offers a more international focus, concentrating on steady growers such as Taiwan Semiconductor TSM, Safran SA SAFRF, and Tencent Holdings Ltd TCEHY.
Another niche entrant is the T. Rowe Price Capital Appreciation Equity ETF TCAF, which mirrors the strategy of the firm’s well-regarded mutual fund of the same name. The fund combines growth and value exposure, holding a mix of large-cap equities and occasional fixed-income positions to balance risk. Its AUM is still modest, but the mutual fund’s strong track record could attract ETF investors looking for a proven, risk-managed approach.
Why The Change?
Active ETFs have been gaining traction as asset managers roll out record levels of products, in some instances, repurposing existing mutual funds into an ETF guise. Investors are drawn to their potential for downside protection, their rapidly declining fees, and increasing popularity as a component of model portfolios offered by brokers and financial advisors.
Although the largest active ETFs from companies such as JPMorgan Asset Management and Dimensional Fund Advisors will likely remain the inflow leaders, success in smaller funds may be the next breakout area. Several of these ETFs’ mutual fund cousins already have billions under management, and it is possible they could quickly grow once investor recognition catches up.
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