PlotSet Chart of the Month: The Rise of Active ETFs

What Sparked the Shift?

The turning point came in 2019 with the SEC’s landmark ETF Rule (Rule 6c-11), which streamlined the regulatory framework for issuers. Prior to this, launching an ETF, especially an active one, required a lengthy, case-by-case approval process.

By creating a unified standard, the rule allowed issuers to bring both passive and active transparent ETFs to market without seeking individual exemptions. This simplification removed major barriers and set the stage for a new wave of innovation as traditional mutual fund managers began adopting the ETF wrapper.

Since then, active ETFs have gained traction among both investors and issuers. For investors, they combine intraday flexibility, lower costs, and greater tax efficiency than traditional mutual funds.

In today’s volatile markets, they offer a practical way to navigate uncertainty and capture inefficiencies across equities, fixed income, and alternatives.

For issuers, the ETF structure provided a modern and scalable way to meet surging investor demand. To capture growing interest, asset managers began launching new active strategies, innovating beyond traditional approaches, or converting popular existing mutual funds into ETFs.

The broader product range in turn attracted even more investors, as choice and accessibility improved.

Combined with stronger marketing efforts and expanding distribution networks, these developments fueled exponential growth in active ETFs.

A Rapidly Expanding Universe

Since then, active ETF launches and inflows have surged.

According to our ETF Central screener, there are currently 2,276 active ETFs compared to 2,407 passive ETFs. Some data providers, which include single-stock ETFs in their active category, even suggest that active listings have now overtaken passive ones.

For issuers, active ETFs offer a cost-effective way to modernize legacy products, expand distribution, and capture new demand. Many firms are transforming proven mutual fund strategies into ETF form, while semi-transparent models allow them to preserve the advantages of active management without revealing every trade.

For investors, growing adoption reflects the search for flexibility, cost efficiency, and better risk control. In today’s environment of higher rates and market dispersion, active ETFs offer a way to navigate volatility and capture inefficiencies. With product options now spanning equities, fixed income, and alternatives, active ETFs are increasingly seen as the middle ground between passive efficiency and active insight.

The Investor Outlook

The latest 2025 Trackinsight Global ETF Survey reinforces this momentum.

The survey, which gathered insights from more than 600 ETF professionals overseeing over $1 trillion in ETF assets, found that 70% of professional investors plan to increase their exposure to active ETFs, citing greater flexibility, innovation, and improved risk management potential.

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Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.