The Australian exchange-traded funds (ETF) market surpassed $240 billion in assets under management (AUM), with some US$34 billion attributed to active ETFs – or 15 per cent, according to J.P. Morgan Asset Management (JPMAM).
New data from the fund manager has revealed that active ETFs are outpacing passive funds in growth in Australia. Since 2018, the compound annual growth rate (CAGR) of active ETF AUM has been 53 per cent, significantly higher than the 27 per cent growth seen in passive funds.
This trend is mirrored globally, with flows into active ETFs in 2024 surpassing those in 2019 by more than nine times. Last year, active ETFs accounted for 21 per cent of all flows into ETFs, with projections showing this will reach 34 per cent this year.
Speaking to InvestorDaily, JPMAM’s global head of ETFs, Travis Spence, said global active ETF AUM grew 47 per cent CAGR over the last five years to US$1.1 trillion and the fund manager expects it to reach US$6 trillion by 2030.
This, he noted, means active ETFs will increase from 7 per cent of global ETF assets to around 20 per cent by 2030.
“Active ETFs in Australia currently make up 15 per cent of total ETFs and growing faster from a lower base. We believe the availability of fundamental active strategies and new investment outcomes will be the next driver for the active ETF evolution in Australia,” Spence said.
According to JPMAM, the percentage of flows into active ETFs has shifted significantly. As of 2025 year to date, 53 per cent of flows have come from equity, up from just 16 per cent in 2019. Meanwhile, flows into fixed income active ETFs now account for 37 per cent, a sharp decline from 75 per cent six years ago.
Data from MSCI earlier this month found that wealth managers globally are highly likely to increase their active ETF allocations.
The index providers’ report, Emerging Trends in Wealth Management, surveyed 220 wealth management professionals globally on the state and future direction of the industry.
The survey found over three-quarters of wealth managers (76 per cent) expect to increase their allocations to active ETF either “moderately” or “significantly” over the next three years.
MSCI noted these types of vehicles are “not typically” included in model portfolios used by wealth managers currently.
“Interest in active ETFs appears to be heating up because they combine the transparency and low transaction costs of the ETF structure but also allow for active bets in lieu of passive exposures,” it said.
“The active ETF market is an emerging yet rapidly expanding market segment, particularly in the US, where growth has been driven by mutual fund conversions. Gaining visibility into these ETFs’ holdings and strategies and educating clients about them are important steps toward increasing allocations.”
Last month was a popular month for active ETF launches with Schroders, Macquarie Asset Management, PIMCO and Janus Henderson all launching active products.
