Description
Passive investing won. So why are active managers now embracing ETFs?
For years, ETFs were closely associated with passive investing, while traditional fund managers built their businesses around actively managed mutual funds. But that distinction is starting to break down, as some of the biggest names in banking and asset management increasingly launch ETFs of their own.
The latest example is Santander, which is preparing to enter the European ETF market with three funds, including its own S&P 500 ETF. It joins established managers such as Schroders, Pictet and AllianceBernstein in expanding into the ETF market. So why are firms that built their businesses around traditional funds now embracing the structure that helped disrupt them?
In this week’s Explain That Fund, we look at why the ETF is increasingly becoming the packaging rather than the investment strategy itself, what is driving traditional managers into the market and what the growth of active ETFs means for retail investors. As the range of ETFs becomes broader and more complicated, understanding what sits inside the wrapper is becoming increasingly important.
What will be covered?
- Why ETFs and passive investing are not the same thing
- Why traditional asset managers are launching ETFs
- What Santander’s move into the European ETF market tells us
- Why distribution is becoming increasingly important for ETF providers
- How active ETFs are changing the fund management industry
- Why investors need to look beyond the ETF label and understand what they are actually buying
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