Financial Services Ireland


Active ETFs: opportunities and obstacles

Read more

As ETF promoters look to launch new products that can help generate a higher fee income, active ETFs are an obvious place to start:  The average fee rate for active ETFs is over double the overall industry average on a global basis. In this instalment of our ETF research series, we look at the reasons why more than 90% of respondents see active managers enter the ETF space in order to create active ETFs over the coming 3 years, while just under 90% indicate that existing passive ETF promoters will enter this space over the coming 3 years.

Our overall analysis paints a picture of a confident industry, and that confidence comes through in the active ETFs arena as well, where around a third think the compound annual growth rate in active ETFs will be 10% or more over the coming 3 years, across Asia, Europe and North America. Yet this significant growth is subject to overcoming hurdles, some of which are substantial. Clearly active ETFs are growing as barriers to entry are falling. It’s time to review the obstacles  – and the opportunities.

Kieran Daly, Associate Partner, Wealth and Asset Management, commented:

Unlike passive ETFs, there is no single global framework for active ETFs. And in our view, national variations in regulation mean this is likely to persist. But that does not mean that issuers – or investors – should ignore this potentially valuable product.”

Download this article to discover the benefits of the ETF wrapper that are luring new players into the active ETF arena, as well as the downsides – from upfront costs to transparency requirements – that are deterring some issuers. We also discuss why now is a good moment for potential issuers to take a fresh look at active ETFs.

If you have a question, please don’t hesitate to get in touch.

Thought Leaders

Lisa Kealy

Financial Services Markets Leader

Kieran Daly

FS Partner, Assurance, Wealth and Asset Management