Active ETFs delivered a broadly positive month in May, with almost the entire universe in positive territory, according to QuotedData’s monthly performance screen. Of the 357 share classes analysed, 352 rose over the month, with only five recording negative returns.
The strongest gains were concentrated in higher-beta thematic equity strategies, particularly those exposed to AI, technology, innovation and emerging markets. The best-performing fund was iShares AI Innovation Active UCITS ETF, whose USD share class rose 19.7% over the month. Other AI and technology-linked strategies also featured prominently, including Amundi S&P World Information Technology Screened UCITS ETF, up 13.8%, and ARK Artificial Intelligence & Robotics UCITS ETF, up 12.9%.
The ARK range of funds enjoyed a banner month. ARK Genomic Revolution ETF rose 16.9%, while ARK Space & Defence Innovation UCITS ETF and ARK Innovation UCITS ETF were up 14.1% and 10.4%, respectively. The pattern suggests that May was not simply a broad market recovery for active ETFs, but a month in which investors rewarded more thematic, higher-beta strategies.
Emerging market active ETFs also had a strong month, despite the less helpful inflation backdrop. This was partly because the rally was not a broad emerging market trade, but was driven by specific areas of strength, particularly Taiwan and Korea, where exposure to the AI supply chain, semiconductors and technology hardware remained a major support. More broadly, the inflation impact across emerging markets is uneven: some countries and companies are exposed to higher energy and import costs, while others can benefit from commodity strength, stronger domestic demand or earlier progress in their own interest-rate cycles. That helped emerging market strategies perform well even as investors remained alert to the risk that higher inflation could keep developed-market rates elevated for longer. JPM Global Emerging Markets Research Enhanced Index Equity SRI Paris Aligned Active UCITS ETF rose 14.9%, while Fidelity Emerging Markets Equity Research Enhanced UCITS ETF gained 12.0% and iShares Emerging Markets Equity Enhanced Active UCITS ETF was up 11.9%. JPMorgan’s broader emerging markets research enhanced strategy also appeared among the better performers, with a gain of just over 10%.
The strength was not confined entirely to AI and emerging markets. Japan exposure also performed well, with BNP Paribas Easy ESG Enhanced Japan UCITS ETF rising 8.3%, while several global equity strategies posted gains of between 7% and 12%. However, fixed income and short-duration bond strategies were naturally clustered towards the lower end of the performance table, with many still positive but generally recording low single-digit returns.
Our view
David Batchelor, senior analyst at QuotedData, said: “May was a strong month for the active ETF universe, but was also an example of how quickly leadership can narrow around a handful of themes. The challenge for investors is to decide whether these gains reflect the beginning of a more durable rotation into certain thematic and higher-beta exposures, or whether May was simply a powerful rebound in the parts of the market most sensitive to improving sentiment”.
