Active ETFs have become increasingly popular with investors, and several fund houses in Europe are launching new products to capture this demand. But how have such products performed in the first half of 2024?
The active ETF universe is still modest in Europe. According to a Morningstar report from April, these funds account for only 2% of the total ETF assets across the continent. If we include different ETF share classes across multiple currencies, there are 170 active ETFs available to European investors. Of these, 10 have been launched in 2024.
For this review, we are looking at the oldest share class versions where multiple ETFs exist. In some cases, where the oldest share class is unavailable, we have included the share class with a Morningstar Medalist Rating. In the few cases where neither was available, we have selected the highest performer among the currencies.
It is also important to note that the chosen currency for your share class can make a significant difference. For example, the highest-performing active ETF overall, JPM Japan Research Enhanced Equity ESG ETF, is up 22.70% in Japanese yen. However, the oldest share class of the same product, listed in US dollars, has only returned 5.81%. The yen has fallen sharply against the dollar this year, with authorities in Tokyo forced into measures to prop up the Japanese currency.
The top 10 performers are all equity strategies investing across Japan, Europe, US, emerging markets and globally. We also find Europe, emerging markets and global ETFs at the bottom, alongside long/short equity and bonds.
Only 24 active exchange-traded funds had negative returns over the period and six of these were in the double-digits. In contrast, 21 ETFs saw growth higher than 10%.
Beware The ‘Shy-Active’ ETF
While the ETFs highlighted here are more active than their passive counterparts, the recent Morningstar report Active ETFs in Europe: Small, Shy, and on the Rise highlights such vehicles might be less active than you’d expect.
“Most of the active ETFs available in Europe are ‘shy-active’, with lower active share and/or tracking error than similar active open-end funds,” it says. “As a result, investors should moderate their excess returns expectations from such products.”
When looking at the 20 largest equity active ETFs against a category-specific, representative ETF, the analyst team found half of them were less than 50% active (on a historical average).
Which Active ETFs Have Performed Best?
Among the
