Sandra Testani, CFA, CAIA, Vice President, ETF Product Strategy for American Century Investments, joined Keith Black, Managing Director of RIA Channel, to discuss trends in ETF flows.
Previously, many investors had the perception that ETFs exclusively invested in passively managed equity indices. Over the last year, there has been significant growth in the flows to actively managed ETFs and fixed-income ETFs. Fixed-income ETFs comprise 20% of ETF assets under management but gathered two-thirds of asset flows in early 2023. Similarly, actively managed ETFs are 6% of ETF AUM yet earned 30% of flows in early 2023. Many well-respected active managers are new to the ETF space given the new regulatory opportunity to launch active ETFs.
American Century has a broad platform of ETFs focusing on actively managed and fixed-income ETFs. These ETFs employ the same investment philosophy, process, and approach always offered by the American Century portfolio management team.
Fixed-income markets may be less efficiently priced than equity markets, so managers may be able to add value through active management. Duration and sector management are critical in this environment of volatile rates. American Century has launched a suite of multi-sector actively managed fixed-income ETFs covering different duration targets across the yield curve. These ETFs include the Multisector Floating Income ETF (FUSI), the intermediate duration Multisector Income ETF (MUSI), and the Short Duration Strategic Income ETF (SDSI).
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