Brett Sheely, Head of ETF Specialists at AllianceBernstein, joined Julie Cooling, Founder and CEO of RIA Channel, to discuss how active ETFs are growing asset share in the ETF market.
Demand has been strong since AllianceBernstein entered the market with a suite of active ETF offerings, reaching nearly $3 billion of assets in 15 funds. Investors are attracted to the benefits offered by the ETF structure, including intraday liquidity, tax efficiency, and lower fees. The majority of asset flows into active ETFs are to funds with expense ratios between 20 and 40 basis points. In the first five months of 2024, active ETFs accounted for 30% of all ETF fund flows, despite having only 7% of ETF assets.
AB will continue to launch new funds or convert existing actively-managed strategies into ETFs. The firm is responding to investor demands for a full suite of products that can provide income or be used as core holdings. AB is benefiting from flows into taxable fixed-income, as many investors are lengthening duration in anticipation of lower interest rates. As the US equity market posts strong performance, investor interest is turning to funds with high dividend and low volatility equity strategies.
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