Many investors and model builders continue to prefer the lower costs and added convenience of ETFs. Simultaneously, advancements in data, technology and regulation have enabled more strategies to be offered through the ETF wrapper, driving innovation and adoption. We expect active ETFs to reach $4T in AUM globally by 2030.1
Tax efficient
Over the last 5 years, 73% of U.S. equity active mutual funds distributed capital gains compared to only 19% of active equity ETFs.2
Easy to trade
ETFs trade like stocks during market hours on exchanges and offer intraday liquidity making it easy to manage your portfolio trades.
Transparency
Know what you own. All iShares active ETFs are fully transparent, disclosing their full portfolio holdings each day.
Accessibility
Access BlackRock's active management in the ETF wrapper that can be purchased with no investment minimum.
The BlackRock active platform generated $8B of alpha in the first half of 2024.³
Systematic investing: leveraging AI & big data
Combining quant-based investing with machine learning and AI alongside human expertise to seek consistent outcomes.
Fundamental fixed income: building resilience & income
Integrating macroeconomic analysis, sector allocation, and security selection to identify opportunities in fixed income
Municipal bond group: maximizing tax-free income
Applying deep credit research and thoughtful risk management to generate strong after-tax returns.
Fundamental equities: diving deep into fundamentals
Conducting rigorous fundamental analysis to identify high-conviction, undervalued names with long-term growth potential.
Many advisors overlook how taxes can impact returns more than fees. BlackRock’s Tax Evaluator helps track capital gains across 7K+ funds and spot tax-loss harvesting opportunities to help clients keep more of what they earn.
Active ETFs are investment funds that are actively managed by professional portfolio managers. They trade on stock exchanges, providing investors with the potential benefits of active management and exchange-traded funds (ETFs).
Active ETFs may aim to outperform the market, gain access to specific market sectors, or target a specific outcome. Index ETFs seek to track the performance of a specific index.
Active ETFs offer several potential advantages, including:
Active ETFs are managed by professional portfolio managers who actively select and adjust the fund's holdings in an effort to meet its investment objectives. This involves ongoing analysis and decision-making based on market conditions.
Risks may include market volatility, manager performance, and the impact of fees on returns. Investors should carefully consider these factors and assess their risk tolerance before investing in active ETFs.
ETFs have historically been associated with passive strategies, but regulatory changes in 2019 led to a proliferation of actively managed ETFs. Investors are using active ETFs to pursue specific investment goals including generating income, maximizing total return, managing risk, and accessing harder-to-reach segments of the market.
An active mutual fund may convert to an active ETF to reduce costs, improve tax efficiency, and attract advisors seeking ETF flexibility. Conversions also allow legacy managers to compete with newer, lower-cost ETF issuers. While conversions were popular a few years ago, this trend has slowed since 2021, with conversion AUM dropping from $38 billion in 2021 to $7 billion in 2024.
Active ETFs can be used to complement existing portfolio strategies by providing targeted exposure to specific sectors, asset classes, or investment themes. They can also be employed to enhance diversification and manage risk.
As with all investment companies, active ETFs are required to distribute capital gains within the fund to shareholders. However, active ETFs can be more tax efficient than active mutual funds due to their unique creation/redemption process, which can help reduce capital gains distributions compared to mutual funds.
Evaluating the performance of an active ETF involves analyzing its historical returns, comparing them to relevant benchmarks, and assessing the consistency of the portfolio manager's strategy and execution. It is also important to consider whether the fund is effectively pursuing and achieving its stated investment objective, as this reflects the manager’s ability to deliver on the fund’s intended outcomes.
1. Source: BlackRock, as of June 30, 2024. Estimates are for global figures and include 2030 scenario calculations based on proprietary research by BlackRock Global Product Solutions. Subject to change. The figures are for illustrative purposes only and there is no guarantee the projections will come to pass.
2. Source: BlackRock GBI, Morningstar as of 12/31/2024. Analysis includes U.S. equity mutual funds and U.S.-listed equity ETFs with available NAVs as of 11/30 in each applicable year. Past distributions are not indicative of future distributions.
3. Source: BlackRock, as of 6/30/24. Alpha is the excess return of a fund relative to the return of a benchmark. The active platform universe includes all BlackRock’s current active equity, fixed income, multi-asset and liquid alternative high-discretion accounts which do not have client discretion or restrictions. This includes USD $1,114B in assets, representing assets managed on behalf of clients in individual client separate accounts and all commingled fund types. As of June 30, 2022, calculation methodology has changed from dollar weighted to time weighted alpha calculation. Time weighted metrics may suffer from survivorship bias. Further detail and dollar-weighted metrics are available upon further request. Not all strategies included will be available in every jurisdiction. Accounts and strategies no longer in existence as of this date are not included. All figures shown are calculated in USD. Benchmark used is primary prospectus benchmark or client-defined benchmark, except in a very narrow set of cases where BlackRock has set an internal benchmark that is more reflective of the strategy.
Investing involves risks, including possible loss of principal.
Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses which may be obtained visiting the iShares ETF and BlackRock Mutual Fund prospectus pages. Read the prospectus carefully before investing.
Actively managed funds do not seek to replicate the performance of a specified index, may have higher portfolio turnover, and may charge higher fees than index funds due to increased trading and research expenses. Active funds are subject to management risk, which means the fund manager's techniques may not produce desired results, and the selected securities may not align with the fund's investment objective. Legislative, regulatory, or tax developments may also affect the fund manager's ability to achieve the investment objective.
ETFs are obliged to distribute portfolio gains to shareholders by year-end. These gains may be generated due to index rebalancing or to meet diversification requirements. Trading shares of ETFs may also generate tax consequences and transaction expenses.
Diversification and asset allocation may not protect against market risk or loss of principal. There can be no assurance that an active trading market for shares of an ETF will develop or be maintained.
The strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective. The information presented does not take into consideration commissions, tax implications, or other transactions costs, which may significantly affect the economic consequences of a given strategy or investment decision.
This material contains general information only and does not take into account an individual's financial circumstances. This information should not be relied upon as a primary basis for an investment decision. Rather, an assessment should be made as to whether the information is appropriate in individual circumstances and consideration should be given to talking to a financial professional before making an investment decision.
This material does not constitute any specific legal, tax or accounting advice. Please consult with qualified professionals for this type of advice.
The Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).
©2025 BlackRock, Inc. or its affiliates. All Rights Reserved. BLACKROCK, LIFEPATH, ALADDIN and iSHARES are trademarks of BlackRock, Inc. or its affiliates. All other trademarks are those of their respective owners.
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