The number of active ETFs has dramatically increased, with assets held by independent RIAs rising from $28 billion in early 2021 to nearly $400 billion by the end of 2022. However, industry experts caution that the overwhelming variety of these products complicates portfolio management for advisors, making it essential for asset managers to provide education and tools to navigate this expanding market.
The rapid increase in active ETFs, now accounting for 80% of new launches, is creating challenges for advisors who must carefully assess where these products fit within client portfolios. As a knowledgeable investor, focusing on thorough due diligence and staying updated on performance metrics is crucial, given that a significant portion of active funds tend to underperform their benchmarks over the long term.