Despite predictions that active management is dead, Bloomberg Intelligence senior ETF analyst Eric Balchunas believes that active management is actually “alive and alive.”
Moderating a panel on the changing face of active management at Exchange: An ETF Experience on Wednesday, Balchunas said, “Active is alive and well, it’s not dying, it’s just changing shape,” before adding, “We have themes, smart beta model portfolios, ESG, ETFs – that is actively trading ETFs – direct indexing, which I think is a form of asset, so that’s really interesting.
At Pensions & Investments, Kathie O’Donnell reports that panelist Matt Hougan, Chief Investment Officer of Bitwise Asset Management, said the rise of passive management is “definitely improving the asset” and that active managers “have somehow kind of ruined everything” and had “these huge fees” that could have been lowered.
“I think the undeniable wave of liabilities has awakened good active managers to this fact, that they need to be more transparent, that they need to be more convinced,” Hougan said. “I think the rise of liabilities has pushed active managers in the right direction.”
The feeling that active management still has a lot to offer is shared by many investors and advisors. After being in the market for just two years, investors have become increasingly comfortable with actively managed ETFs, having injected $21.6 billion net into these funds in the first quarter (11% of all net flows to ETFs during the period).
Boston-based financial adviser Raj Sharma recently told Barron’s that he thinks “this was the golden age of active management”, adding: “Passive management worked when the rising tide lifted all the boats. Now you have an environment where you have winners and losers.
“Advisors are increasingly comfortable with the expertise that active managers can provide with the liquidity and tax-efficiency benefits provided by ETFs,” said ETF Trends head of research Todd. Rosenbluth. “There is still huge room for growth in the years to come.”
T. Rowe Price offers a suite of actively managed ETFs. T. Rowe Price has been in the investment industry for over 80 years conducting hands-on research with companies, utilizing risk management and employing a multitude of experienced portfolio managers averaging 22 years of experience .
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