Historically, the exchange-traded fund ("ETF") industry has been dominated by passively-managed (passive) investments, but over the past few years, actively-managed (active) ETFs have gained a foothold. One catalyst for this turn of events was the Securities and Exchange Commission’s (“SEC”) adoption of a new regulatory framework in 2019 (the “ETF Rule”), which made it easier for fund managers to launch active ETFs. However, this doesn’t explain the increase in demand for these ETFs, which occurred even as active open-end funds faced massive redemptions. We discuss some of the factors that we believe have led to increased adoption of active ETFs, highlighting why we believe this trend is still in its early stages.

To continue reading, click here.