Why are Actively Managed ETFs (AMETFs) gaining traction? Thulisa Shandu from EasyAssetManagement explores how AMETFs give you the best of both worlds: pro-level management, sharp strategies, and global reach, all wrapped up in the comfy, familiar ETF package.
What are Actively Managed ETFs (AMETFs)?
Exchange Traded Funds (ETFs) have offered a convenient and diversified way to access various markets. But within the ETP universe, a specific product stands out for its dynamic approach: actively managed ETFs.
Actively Managed ETFs (AMETFs) bring a different approach to the table by leveraging the expertise of professional fund managers. These managers actively select and manage the underlying assets in the fund, aiming to deliver returns that outperform the fund’s performance benchmarks. This hands-on strategy appeals to investors looking for a blend of professional management, targeted investment strategies, and the flexibility of a listed product.
Benefits of Actively Managed ETFs
- Seasoned fund managers aim to identify undervalued companies or trends, potentially delivering returns that exceed the broader market.
- Actively managed ETFs can focus on specific sectors or investment themes, like technology or sustainability, allowing you to target areas with high growth potential.
- These also offer a convenient way to access a professionally managed portfolio, saving you time and research effort.
Global popularity of actively managed funds
Actively managed ETFs are experiencing a boom. Assets invested in these funds reached a record-breaking $838 billion globally at the end of March, surpassing the previous record of $797.63 billion set in February 2024. This impressive growth reflects a 13.5% increase year-to-date, up from $738.21 billion at the end of 2023.
Investor appetite for actively managed ETFs is clear. March saw a record-breaking $25.31 billion in net inflows, bringing the year-to-date total to a staggering $71.53 billion. This surpasses the previous record of $46.97 billion set in 2021.
While the overall market performed well, with the S&P 500 gaining 3.22% in March and 10.56% year-to-date, actively managed ETFs seem to be attracting investors seeking specific expertise. Equity-focused actively managed ETFs saw strong inflows of $16.83 billion in March, while fixed income options attracted $5.97 billion. This trend suggests investors are looking for targeted strategies beyond broad market performance.
The US ETF Market: A hotbed for Innovation
The US market for actively managed ETFs is a dynamic landscape, constantly evolving to meet investor needs. Here are some key trends shaping the scene:
- Thematic Titans: These new-age ETFs focus on specific themes like cybersecurity or social responsibility, catering to investors with laser-focused interests.
- Smart Beta Strategies: These actively managed ETFs go beyond traditional market capitalization weighting, aiming to capture superior returns through alternative weighting methodologies.
- Technology Integration: Financial technology advancements are making it easier for investors to research and compare actively managed ETFs, fostering greater competition among fund managers.
The top 20 actively managed ETFs/ETPs are leading the charge, collectively gathering a massive $14.07 billion in net inflows during March. Blackrock's US Equity Factor Rotation ETF (DYNF US) stands out, attracting a $3.57 billion, the highest individual net inflow.
With record assets and strong inflows, it seems investors are increasingly turning to these funds for professional guidance in navigating the markets.
Other Actively Managed ETFs in South Africa
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Provider
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Product
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Region
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Class
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Index Tracked
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JSE Ticker
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10X
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10X All Asia Actively Managed
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Foreign
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EQ
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FTSE Asia Pacific (ex Japan) Index as its benchmark
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APACXJ
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Sygnia
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Sygnia Itrix FANG.AI AMETF
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Foreign
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EQ
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Actively Managed Certificate
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SYFANG
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Prescient
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Numoro Aqua Global Multi Asset Prescient AMETF
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Foreign
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EQ
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Actively Managed ETFs
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AQUA
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10X
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10X Income Actively Managed
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Domestic
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Bond
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STeFI Composite+1%
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INCOME
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Prescient
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Prescient Income Provider (PIP) Feeder AMETF
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Domestic
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Bond
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Actively Managed ETFs
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PIPETF
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|
Prescient
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Portfoliometrix Active Income Prescient AMETF
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Domestic
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Bond
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Actively Managed ETFs
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PMXINC
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Prescient
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Reitway Global Property Actively Managed Prescient AMETF
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Foreign
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EQ
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Reitway Global Property Actively Managed Index
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RWAGP
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Experts believe AMETFs hold massive potential. However, unlike the global surge in AMETFs, South Africa hasn't quite seen that explosion yet. One reason? For South African investors, there's no tax benefit to choosing AMETFs over unit trust funds.
But here's a silver lining for fund managers: AMETFs allow 100% offshore investment. This solves an exchange control headache, letting you access a world of global funds using your South African Rand. So, while the tax perks might not be there yet, AMETFs offer a powerful tool for fund managers to diversify your portfolio beyond local borders.
AMETFs open doors to exciting new themes and markets, all accessible through the familiar JSE platform. This means you can explore investment opportunities that were previously difficult or impossible to access. Imagine wanting to invest in a specific niche within the bond market, but the options are either illiquid or unlisted. AMETFs solve this problem. They provide unique exposure to asset classes that were previously out of reach.
If you've been using online share trading platforms to invest in ETFs, AMETFs offer a new level of sophistication. These innovative funds allow you to tap into the expertise of active fund managers, potentially enhancing your investment returns.
Just like passively managed ETFs, AMETFs boast a liquidity provider. This ensures there's always someone ready to buy or sell throughout the trading day. This means you can jump on an investment opportunity or exit a position whenever the JSE is open, offering flexibility.
AMETFs and ETFs are a fantastic starting point for novice investors. They eliminate the need to research and pick specific stocks, which can be daunting for beginners. With ETFs, you get a diversified mix, reducing your exposure to any single company's performance.
Confused about which ETF to choose?
EasyCompare offers a user-friendly platform to compare different ETFs and their holdings. They even have a beginner's course on ETFs, helping you understand exactly what you're investing in before you dive in.
Here's the exciting part
Learn more about the EasyETFs AI World AMETF in this chat with Carly Esterhuizen, VP of Brand at EasyEquities, and David Oberholzer, Business Manager for EasyETFs.
This AMETF, managed by EasyAssetManagement, is designed to provide investors with access to groundbreaking companies benefiting from the development, adoption, and application of AI.
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