We believe the flexible solutions offered by active ETFs make them an effective vehicle for accessing a range of markets, including those where structural inefficiencies make robust risk management and security selection essential. Their combination of active management with the benefits of the ETF structure has helped drive increased investor demand, with global assets under management in active ETFs growing by 46% annually since the start of 2020.1 Looking ahead to 2026, we see continued growth potential for active ETFs, particularly in fixed income, private assets and derivative-income ETFs.
Fixed income opportunities
Active ETFs are a natural fit for fixed income investors, in our view, helping them navigate structural inefficiencies in many areas of the market as well as risks including interest-rate movements and the creditworthiness of issuers. These potential benefits have boosted demand in recent years, with active fixed income ETFs now accounting for 41% of total inflows to US-listed fixed income ETFs.2 Looking forward, we see attractive fixed income opportunities in the year ahead from both a technical and fundamental standpoint, and we think the balance of risks favors the sort of dynamic approach and rigorous bottom-up security selection that active ETFs can provide. We think income opportunities exist in harder-to-access parts of the fixed income market, including high yield and emerging market debt. Expected central bank rate cuts in the US and elsewhere over the next year should benefit fixed income, including investment-grade credit and front-end US Treasuries. In all these areas, we believe the liquidity and transparency of active ETFs allow investors to manage their fixed income positions dynamically.
