In an article for John Hancock Investment Management, Steve Deroin, the Head of Asset Allocation Models and ETF Strategy, discusses why he believes active fixed income will see a strong decade of growth as it’s uniquely positioned for the current market environment.
Active ETFs are a small share of the total market, but they are rapidly growing. It provides the benefits of the ETF structure, while being more responsive to a volatile market environment. Currently, active ETFs have 5.3% market share but received 14.4% of net inflows in 2022. Additionally, they accounted for 63% of all new ETFs in 2022 which is the 3rd straight year that active offerings outpaced passive ones.
In the fixed-income market, active ETFs offer exposure to bonds with more liquidity, transparency, and lower costs. Many passive fixed income ETFs don’t offer exposure to higher-yielding instruments and are instead concentrated in Treasuries and mortgage-backed securities.
Thus, given these trends and a much more volatile market environment, the active fixed income ETF segment will continue to rapidly grow.
Finsum: Active fixed-income ETFs are growing faster than passive fixed-income and active equity ETFs. Expect this trend to continue over the next decade.
- fixed income
- advisors
- active etfs
- bonds
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
