Core Insights - Active ETFs are gaining popularity among investors due to lower fee structures, which enhance the likelihood of fund managers outperforming passive benchmarks [1][2] - The average active ETF charges 0.63% in expense ratios, significantly lower than the 1.02% average for mutual funds, which is crucial for active managers aiming to achieve market returns minus fees [2] Fee Comparison - Active ETFs have an equal-weighted average expense ratio of 0.63%, while mutual funds average 1.02% [2] - When weighted by assets, active ETFs charge 0.40% compared to 0.58% for mutual funds, indicating a clear cost advantage for active ETFs [2] Performance Metrics - Only 21% of U.S. active funds managed to survive and outperform their average passive peers over the decade ending June 2025 [2] - The T. Rowe Price International Equity ETF (TOUS) exemplifies the cost advantage, with a 0.50% expense ratio and $815.4 million in flows year-to-date [3] Market Trends - Over 1,300 active ETFs have been launched since the beginning of 2024, reflecting a growing trend in the market [4] - Active ETFs provide greater tax efficiency through in-kind creations and redemptions, helping to avoid capital gains distributions that often affect mutual funds [4] Structural Advantages - Active ETFs benefit from lower trading costs and reduced impact from buying and selling by other investors, positioning them for better success rates against passive benchmarks compared to mutual funds [5]