This year will be decision time for firms still mulling their best path to participating in the active exchange-traded fund market, according to Daniil Shapiro, an associate director at Cerulli Associates, which released a new ETF research report Thursday.
“This is the year that ETF issuers or legacy mutual fund managers have to make a decision as to how they are going to participate in this active ETF landscape,” Mr. Shapiro said in an interview Thursday, adding that while a lot of firms have tested the waters with different strategies or adopted a wait-and-see approach, “2022 is the year that they really have to decide which strategy they are going with.”
The new research, “U.S. Exchange-Traded Fund Markets 2021: Reaching a Growing Investor Base,” found that ETF issuers believe that the active ETF opportunity — more so than the strategic beta or passive one — is currently the most attractive for new product development, according to a Cerulli news release regarding the report.
Seventy percent of polled ETF issuers are either presently developing or planning to develop transparent active ETFs, while 50% report the same for semi-transparent active ETFs, according to an executive summary of the report.
Mutual fund to ETF conversions may serve as another avenue for managers seeking to enter the ETF market, though that process can be “operationally complex,” Mr. Shapiro said.