The Active ETF Era: Breaking Out from the Shadows

The global ETF industry has entered an inflexion point, and nowhere is the shift more profound than in the rapid ascent of actively managed ETFs. Once considered niche, active ETFs are now taking centre stage—propelled by investor demand, regulatory tailwinds, and bold product innovation.

A Decade of Change in a Flash

According to Trackinsight’s 2025 Global ETF Survey, active ETFs now represent 27% of all listed ETFs globally—up from just 13% in 2019. In sheer numbers, there are over 3,300 active ETFs on the market, more than double the total from six years ago.

The pace of adoption is accelerating:

• 51% of all new ETF listings in 2024 were active, surpassing passive strategies for the first time.
• By early 2025, that share jumped to 60%.
• Global active ETF assets surged to $1.2 trillion, up from $695 billion in 2023.

Why Investors Are Making the Switch

Survey results in the report paint a clear picture of why active ETFs are on the rise:

• Potential for outperformance tops the list (cited by the majority of respondents).
• Lower fees than active mutual funds, better risk management, and transparency are also major draws.
• Nearly 70% of respondents said they plan to increase their active ETF allocations over the next six months.

View the full survey results & charts here →

But it’s not without hurdles. A lack of track record and performance concerns remain the most cited barriers, followed by a limited product range in some regions.

U.S.: Leading the Charge

Nowhere is the active ETF revolution more visible than in the United States:

• Active ETFs now make up 46% of all U.S.-listed ETFs.
• They gathered a record $301 billion in net inflows in 2024, accounting for 37% of total flows.
• Regulatory momentum is also building, with the SEC reviewing share class reform proposals that could allow mutual funds and ETFs to coexist within the same structure.

Conversions from mutual funds, closed-end funds, and SMAs are accelerating, and ETF investors overwhelmingly favor full transparency—only four of 53 share class applicants requested semi-transparent formats.

Europe: Catching Up, Fast

Europe is seeing an active awakening:

• Active ETFs account for 7.2% of listings, up from 2.4% in 2019.
• In 2024, they captured 22% of new launches—rising to nearly 40% in early 2025.
• Assets crossed $56 billion, and inflows hit a record $18.2 billion.

Reforms in Ireland and Luxembourg—including the approval of ETF share classes and tax breaks—are catalyzing growth. European investors are also expanding into new frontiers like CLOs and private credit.

Canada: Quietly Dominating

Canada holds the highest market penetration globally:

• 55% of all Canadian ETFs are actively managed.
• They make up 31% of the country’s ETF AUM, with assets reaching $127 billion.
• 76% of all Canada’s ETF launches in 2024 were active, signaling the market’s clear preference for active mandates.

APAC: Rising on the Radar

APAC markets are evolving quickly:

• In Australia, active ETFs now represent over 15% of ETF assets.
• South Korea’s active ETF assets reached $50 billion, driven by retail enthusiasm for tech and dividend plays.
• Japan, Singapore, and Hong Kong are all introducing novel active structures, from AI-powered funds to covered-call ETFs.

From Tactical Tool to Core Allocation

While most investors still allocate under 50% of their portfolios to active ETFs, a structural shift is underway:

• Active ETFs are most often used as replacements for traditional active mutual funds and passive ETFs.
• Equity and fixed income remain the dominant use cases.
• Tracking error? Not a big concern—nearly 40% of respondents say they don’t even factor it in for active strategies.

View the full survey results & charts here →

Conclusion: The Active Era Has Arrived

With share class reforms, growing transparency, and surging investor confidence, active ETFs are no longer a niche—they’re the future. As more investors seek precision, flexibility, and performance in a volatile market, active ETFs are poised to take on an even bigger role in portfolio construction worldwide.

In short: The ETF industry isn’t just expanding—it’s evolving. At its core, it is a reinvention of what “active” can mean in a passive world.

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.