The rise of active ETFs (roundtable ‘New Developments in ETFs’ part 2)

January 29, 2026

_{This report was originally written in Dutch. This is an English translation.}

Part 2 of the roundtable ‘New Developments in ETFs’ focuses on active ETFs. Participants discuss why fund managers are embracing this format, whether it is mainly a marketing ploy, and how tracking error, concentration and education determine whether active ETFs really offer added value for investors.

By Hans Amesz

This is part 2 of the report. You can read part 1 here, you can read part 3 here, part 4 will be published on Wednesday 4 February.

What is the advantage of an ETF structure for an active fund manager?

Kevric: ‘For us, it is generally easier and faster to launch an active ETF than a traditional fund. But in terms of the process, we use processes that are very similar to those of our traditional fund. That means it's all about our fundamental research. Incidentally, we do not engage in passive investing.’

Brouwer: ‘The ETF was launched primarily to democratise a certain type of investment for retail investors. The fact that we are now launching active ETFs once again democratises what was previously only available to institutional investors. A market is being offered that did not usually have access to fundamental research or quantitative approaches.’

Hutcheson: ‘The breadth of distribution opportunities for ETFs is interesting. And I think the simplicity, the ability to compare and contrast ETFs, both actively and with an index, is important for ETF investors. With an ETF, for example, you usually only have one price for the share class. You can have different types, but there is only one price for that share class.’

Bialkowski: ‘An ETF structure makes active management more accessible. We are currently investigating an active ETF proposition together with an international partner. It is an opportunity to share our experience in active fund management more widely.’

Sguazzini: ‘ETFs enable us to offer our clients a wider choice. In addition, ETFs provide access to parts of the market that are difficult to reach with traditional funds. We are an active asset manager, but the ETF structure opens up all kinds of new possibilities and can open many doors.’

Isn't the active ETF more of a marketing tool to sell less than optimal solutions to poorly informed investors in core categories?

Brouwer: ‘This is an amazingly well-formulated suggestive question that no one can possibly answer 'yes” to. The most important thing is that, as a fund issuer, you have to answer customer questions. So, what does the customer need? Which product offers a solution for that? Is it an actively managed fund or a passive approach? Or is it something for which you cannot provide a solution using a traditional benchmark? We distinguish four categories or situations in which an ETF must be active: the systematic beta plus, the structurally complex ETF, ETFs with an options overlay, and ETFs with a high conviction “alpha”.’

Hout: ‘From the answer to the previous question, I gather that ETFs open up a new market for providers of active funds, particularly the private market, including young people. In that respect, active ETFs also function as a marketing tool for a target group that often has limited investment knowledge. The question, however, is whether active funds are suitable for this group: the strategies can be complex and difficult to understand and offer no guarantee of better performance than passive investing. In many core categories, passive index funds are also available that are cheaper, with less dividend leakage and therefore higher returns for investors in the long term.’

Hutcheson: ‘It has become increasingly important to educate investors about the differences between active ETFs. Until now, we have mainly seen strategies with a lower tracking error, which fall between index funds and traditional investment funds. I think that will evolve towards strategies with more conviction. I would not be surprised if there were to be more focus on the way we provide information, for example about excess return targets, tracking error targets, and so on.’

How does the concentration of the portfolio compare to that of traditional ETFs?

Kevric: ‘Our active US Research Enhanced ETF, with a tracking error of 2%, contains 247 stocks compared to 500 in the S&P benchmark. If you then look at what we call our fundamental US large caps, you end up with 108 names, which is already quite concentrated compared to the original index. Traditional investment funds in the US portfolio contain between 50 and 100 shares.’

Brouwer: ‘How this compares depends on what you are trying to do. You also have more or less diversified products for very passive, thematic ETFs.’

Sguazzini: ‘The number of positions in the portfolio does not tell the whole story. We see the largest inflows and the most success in research-enhanced index strategies that offer a lower tracking error compared to traditional indices. When we look at fixed-income securities, the portfolio is often more concentrated than the index itself, but the opportunity area for an active manager is much broader. The US Aggregate Index represents only 48% of the total market, while an active manager can utilise the entire universe. We are introducing more and more active strategies with a higher tracking error and see this as an evolution of the market.’

Bialkowski: ‘You can avoid excessive exposure to specific risks through active management. That is an advantage over traditional ETFs.’

Hout: ‘We manage the concentration risk in our passive funds not by the concentration within the products we use, but by allocating in a different way. For example, in our standardised range of portfolios, we do not use an All Country World Index allocation, but a GDP allocation. This means that we have a higher allocation to European and Chinese equities than the ACWI index and relatively less to the United States.’