The exchange-traded fund industry is having a record year, with assets already hitting over $1 trillion, and active managers are driving a big part of that growth. "Third-quarter activity confirmed what we’ve seen building over the past several years: Active ETFs continue to drive innovation and flows," wrote Dan Aronson, managing director, ETF client product specialist group, in Janus Henderson’s "ETF Pulse" through the third quarter. Active managers can be part of the decision-making regarding which s ...

Group 1 - The Schwab U.S. Broad Market ETF (SCHB) is a diversified, low-cost, passively managed exchange-traded fund that provides broad US equity exposure across small-, mid-, and large-cap companies [1] - The ETF has a low expense ratio of 3 basis points (bps) and offers a modest payout [1] - The investment strategy considers the entire investment ecosystem rather than evaluating a company in isolation [1]

Core Insights - A significant majority of workplace plan sponsors, 80%, believe that active management can consistently outperform the market, while 86% agree that actively managed target date funds can mitigate volatility for participants [1][5] - Despite the optimism from plan sponsors, advisors express skepticism regarding the long-term effectiveness of active management, citing that it rarely delivers sustainable outperformance [3][4] Group 1: Active Management Perception - BlackRock's research indicates that active management is perceived as a valuable approach for uncovering value, managing risk, and adapting to market changes, although these benefits are not consistently realized for retirement investors [2][4] - A survey of 1,300 plan participants revealed that 80% are interested in using actively managed funds for their retirement savings, indicating a strong demand for such products despite the skepticism from advisors [5] Group 2: Performance Data - In 2024, 65% of actively managed large-cap U.S. equity funds underperformed the S&P 500, and this figure increases to 84% over a 10-year period, highlighting the challenges of achieving consistent outperformance in public markets [4] - The SPIVA U.S. Scorecard shows that after fees, at least 80% of equity funds and over half of fixed-income funds lagged their benchmarks over the 10-year period ending December 31, 2024 [5] Group 3: Cost Considerations - Advisors emphasize that investors often lack a clear understanding of active products, which typically come with higher costs that can erode long-term returns [6] - The irony noted by advisors is that in attempting to protect participants from market volatility, plan sponsors may inadvertently implement strategies that result in lower retirement savings [6]