John Hooson, Managing Director for BBH’s Global ETF product team, has written that asset managers considering hopping on the trend and adding actively managed ETFs to their portfolios should keep some key considerations in mind.
Hooson suggest that managers should take the early lead, writing: “Managers entering the active ETF space will benefit from first movers’ advantage, allowing them to gather market share in a yet not too crowded field. Managers who already have in-house skills in running and managing active strategies may find it an easier flight path to gather market share and grow assets.”
He also suggests managers look overseas, citing positive performance around the globe, writing that active ETFs maintain a good growth pace and promising start in markets such as the US, Europe, Asia and Australia.
His next recommendation is that firms “try the ‘Biathlon’ through diversification”.
“Diversification ensures that managers can adapt to new market trends,” he says. “By launching active ETFs with complementary strategies, managers can establish a new product offering, which can sit alongside their existing product suite, to provide choice to the market. This provides a new distribution channel giving managers exposure to a new pool of investors who they have not previously sold their products to.”
Finally, Hooson comments on the Finish Line, writing that, even with modest growth in active ETFs,it could be a USD1.2 trillion market by 2033, making it a race definitely worth running.
