Active ETFs have continued to take the investment world by storm as investors of all sizes have embraced the vehicles to build portfolios, enhance tax savings, and generate additional alpha versus indexes. Wall Street has obliged, adding a plethora of new active ETFs to major exchanges and model portfolios.
And yet, more is to be had. Active could see its best days in the years ahead.
That’s according to a new major survey of adoption and use. It turns out that the overwhelming majority of investors plan to use active ETFs in their portfolios for numerous reasons. In the end, active ETFs are just getting started.
A Full 97%
What started out as a small niche has become a full-fledged movement. Since debuting in 2008, the number of active ETFs on major exchanges, as well as the sheer amount of assets in the vehicle, have exploded. Today, there are nearly 1,900 funds, and they are within a stone’s throw away from hitting $2 trillion in total assets.
What’s exciting is that those numbers could continue to grow. That’s because the overwhelming majority of investors are considering using active ETFs in their portfolios in the near future.
Investment bank Brown Brothers Harriman (BBH) recently released its latest 12th annual Global ETF Investor Survey. The survey interviewed institutional investors, RIA/financial advisors, fund management specialists, private bankers, and wealth management professionals across the United States, Europe, and China. More than half of those professionals surveyed manage portfolios in excess of $1 billion.
The results of BBH’s survey are pretty interesting. As expected, the use of ETFs as portfolio building blocks has reached critical mass. According to data, BBH found that 96% of managers now predict they will increase their use of ETFs over the next 12 months, and 63% of them rate ETFs as the top choice for fresh allocations. That’s wonderful news for ETFs as a whole. Investors have continued to notice the benefits of the structure. 1
But what is exciting is the potential for active ETFs. According to BBH, 97% of investors plan to increase their exposure to active ETFs in the next 12 months. Back in 2024, only 78% of respondents were planning to increase active ETF exposure. This chart from BBH’s survey highlights the interest. Only a slight percentage of respondents in Europe plan to reduce their exposure to active ETFs over the next year.
_Source: Brown Brothers Harriman _
BBH’s survey also highlights a potential new trend. Looking at potential asset flows and re-allocations of existing holdings, Brown Brothers Harriman found some startling data. We all know passive ETFs have taken a lot of assets away from active mutual funds. This is supported by the survey, as BBH found nearly 30% of investors plan to re-allocate from mutual funds to ETFs. But active ETFs could finally gain market share and assets away from passive strategies.
Over the next 12 months, 33% of investors plan to shift their passive allocations—both mutual funds and ETFs—to active ETFs. More than half—53%—plan to sell index-based ETFs to raise capital for active ETF exposure. Indexing is out no matter what the vehicle and active is in.
Why Is Active on Top?
Clearly, investors have started to gravitate toward active ETFs for their portfolios, not only as satellite positions, but potentially as core building blocks. The potential shift from passive to active underscores this fact. The question is why.
Digging into the data, BBH has some answers.
Most respondents highlight growing market uncertainty and the ability of active management to be nimbler when dealing with all that volatility. It’s true that the ability to flee to cash, not look at an index, and other features of active management can reduce volatility and drawdowns of a portfolio. Index holders are stuck riding the waves, while active managers can find calmer seas.
Additionally, Brown Brothers Harriman found many investors are excited about active ETFs’ ability to tap into market-buffering strategies via options and derivatives. Both so-called buffer ETFs and covered-call funds were on top of investors’ buy lists in the survey. These funds are specifically designed to deal with the rising uncertainty and provide a smoother ride for portfolios. Moreover, fixed income continues to see a wide swath of interest as investors continue to exploit active ETFs’ ability to play bond market inefficiencies like a fiddle.
Finally, BBH shows the tax efficiency of the ETF structure as being a major reason why active has taken off. It’s even more influential than their lower costs. It turns out more investors are concerned about taxes than paying a little more in fees per year. And with the potential to outperform, investors want to reduce their tax liability as much as possible. This has led to the shift into active ETFs.
Active Is Here to Stay
With such a wide swath of the investment professional community across the U.S., Europe, and Asia now betting big on active ETFs, their growth is assured. New launches continue to be planned, and it looks like they’ll have the asset flows based on BBH’s survey to stick around.
For us regular joes, that’s great news and only increases the toolbox available to build portfolios. Better still is that Brown Brothers Harriman’s survey shows active ETFs don’t have to take a supporting role in a portfolio. They can be used as a prime-time allocation, even taking the place of passive products. This is particularly true with options and buffer funds as well as fixed income ETFs.
Popular Active ETFs
These ETFs represent some of the largest and most popular active ETFs on the market. They are sorted by their YTD total return, which ranges from -5.6% to 2.5%. They have expense ratios between 0.17% to 0.36% and have assets under management between $10B to $41B. They are currently yielding between 1% and 14%.
| Ticker | Name | AUM | YTD Total Ret (%) | Yield (%) | Exp Ratio | Security Type | Actively Managed? |
|---|---|---|---|---|---|---|---|
| FBND | Fidelity Total Bond ETF | $18.1B | 2.5% | 4.8% | 0.36% | ETF | Yes |
| JPST | JPMorgan Ultra Short Income ETF | $30.7B | 2% | 4.6% | 0.18% | ETF | Yes |
| DFUV | Dimensional US Marketwide Value ETF | $11.6B | 1.8% | 1.7% | 0.21% | ETF | Yes |
| MINT | PIMCO Enhanced Short Maturity Active ETF | $12.8B | 1.7% | 4.8% | 0.35% | ETF | Yes |
| JEPI | JPMorgan Equity Premium Income ETF | $40.2B | 1.1% | 10.5% | 0.35% | ETF | Yes |
| DFAC | Dimensional U.S. Core Equity 2 ETF | $33.1B | 0.7% | 1.0% | 0.17% | ETF | Yes |
| JEPQ | JPMorgan Nasdaq Equity Premium Income ETF | $23.4B | -2.4% | 13.9% | 0.35% | ETF | Yes |
| DFAT | Dimensional U.S. Targeted Value ETF | $10.6B | -3.4% | 1.2% | 0.28% | ETF | Yes |
| AVUV | Avantis U.S. Small-Cap Value ETF | $15.5B | -5.6% | 1.5% | 0.25% | ETF | Yes |
In the end, active ETFs have been on a growth spurt over the last few years. But now they have reached critical mass. With BBH’s survey showing more and more investors are looking to use them in their portfolios and potentially replacing passive/index strategies with a more active touch, their growth trajectory is assured. For investors, this is all good news as we now have more tools to use.
The Bottom Line
Brown Brothers Harriman’s latest ETF survey underscores the strength of the active ETF movement. With more professionals now turning to active ETFs for core holdings, not just satellite positions, active ETF adoption by the masses is at hand.
1 Brown Brothers Harriman (April 2025). 2025 Global ETF Investor Survey
