ActiveETFs | InFocus

The filing by iShares to launch both equity and fixed-income actively-managed ETFs could just be seen as yet another player tossing their hat in the ring. But there’s a few reasons why this step could be much more than that for the Active ETF space. iShares already has one actively-managed product on the market, in the form of the iShares Diversified Alternatives Trust (ALT: 49.917 -0.48%), which operates a hedge-fund like strategy. But the largest provider of ETFs in the world had not yet provided indications of taking a clear stance on the actively-managed market. In fact, on June 17^th, the same day that iShares filed for exemptive relief with the SEC, Deborah Fuhr – who is the Global Head of ETF Research for BlackRock iShares – voiced her doubts on the actively-managed space taking off, at a conference in Toronto.

However, with this filing, iShares has indeed announced its intentions and the writing on the wall is becoming clearer by the day. When Legg Mason filed to launch these products in February, 2010, it was seen as a possible turning point for the industry, with Legg Mason being one of the largest asset managers having $679 billion in assets under management. This was followed by Eaton Vance joining the line to launch Active ETFs in March, 2010 and provided support for the view that major mutual fund players were using this opportunity to enter the ETF market – a market they had seen growing exponentially in the last 4-5 years.

Now, with iShares’ latest filing, the top 4 ETF providers in the United States who make up close to 90% of all US assets within ETFs – iShares, State Street Global Advisors, Vanguard and PowerShares – each either already have actively-managed ETFs on the market, or have filed to launch products to join the Active ETF space. And the fact that iShares itself holds more than 50% of all US ETF assets and more than 46% of all global ETF assets makes their entrance into the actively-managed space all the more significant. iShares, now being part of BlackRock, also has the advantage of being associated with a well-reputed and established active manager that can provide the expertise and managers needed to launch actively-managed products.

What’s most indicative of the growth the Active ETF space is likely to see is the ratio of existing Active ETF providers to prospective issuers who are filed to launch Active ETFs. While there are only 6 issuers with actively-managed ETFs on the market currently, iShares’ filing brings the number of new companies who have filed to launch these products closer to 20. That fact alone means that the Active ETF space will not be seeing any shortage of activity for the next few years.

Disclosure: No positions in above-mentioned names.

If you haven’t already subscribed to ActiveETFs | InFocus, do it here via Email or via RSS feed!

Disclaimer: Views and opinions expressed on EtfsHub are those of the author alone and do not in any way represent the official views, positions or opinions of the employers – both past or present – of the author in question, or any other institutions and corporations associated with the author. Neither the information nor any opinions contained or expressed above and elsewhere on EtfsHub constitutes or should be construed as a solicitation or offer by EtfsHub to buy or sell any securities or other financial instruments or to provide any investment advice or recommendations. None of the material above and elsewhere on EtfsHub is intended to endorse or promote any company or its products. EtfsHub shall not be liable for any claims or losses of any nature, arising indirectly or directly from use of the information on or accessed through the site. Please see full disclaimers here.