Group 1 - The article discusses the potential threat of stagflation, characterized by stagnant growth and persistent inflation, which could negatively impact market performance [1][2][3] - Active ETF strategies are highlighted as a potential solution for investors facing the challenges of stagflation, particularly emphasizing their ability to outperform passive strategies [4][6] - The T. Rowe Price Natural Resources ETF (TURF) is identified as a fund that could excel in a stagflationary environment, focusing on stocks related to natural resources and charging a fee of 44 basis points [5][6] Group 2 - The TURF fund employs a fundamental, bottom-up approach to portfolio construction, targeting firms classified in the MSCI GICS Natural Resources sector, and has achieved a return of 5.4% over the last three months [6] - The fund's exposure to commodities firms, such as energy leaders like Shell, positions it well to benefit from rising prices, making it a noteworthy option for investors in the coming months [7]

In another (bold) move towards institutional acceptance of digital assets (during an obviously turbulent phase), Goldman Sachs has announced a $2 billion acquisition of Innovator Capital Management. What does this move mean? It will essentially help the Wall Street giant expand its presence in the crypto ETF market. In a 1 December 2025 announcement, Goldman Sachs said that the acquisition will add $28 billion in assets under supervision (AUS) to Goldman Sachs Asset Management’s broad range of custom port ...

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]

Core Insights - Major asset managers are achieving significant milestones in their ETF businesses amid record inflows, with Capital Group's ETFs reaching $100 billion in assets under management [2] - BlackRock's iShares and Vanguard remain the dominant players in the ETF market, holding $3.9 trillion and $3.7 trillion respectively, while newer entrants like T. Rowe Price are gaining traction [2] Industry Trends - Approximately $1.1 trillion has flowed into US ETFs in 2023 through October, surpassing total inflows for all of 2024, with $378 billion specifically directed towards active ETFs [3] - Total assets in the ETF market have exceeded $13 trillion, indicating robust growth and demand for exchange-traded funds [3] Company Developments - Capital Group has focused on core-style products while other niche issuers have introduced leveraged and thematic funds, with a notable increase in model portfolios for active ETFs [3] - As of March, Capital Group became the third-largest provider of active ETF model portfolios, managing $61 billion, following Wilshire and BlackRock [3] Additional Milestones - Invesco is nearing $800 billion across its 240 US ETFs, while Goldman Sachs has surpassed $50 billion with its 45 US ETFs, and T. Rowe Price has exceeded $20 billion with its 24 ETFs [5]

Core Insights - The ETF market is becoming increasingly competitive, making it difficult for issuers to find distribution space for new funds, especially for actively managed ETFs and those with innovative strategies [2][3] - A survey by Cerulli Associates revealed that 71% of asset managers find it challenging to secure shelf space for active ETFs on broker/dealer platforms, with 96% citing home approval on models/lists as a moderate challenge for ETF distribution [2][4] Distribution Channels - ETF issuers prefer wirehouses as the primary channel for growth, with 38% of respondents ranking them as their top choice, while 29% prefer independent and hybrid RIAs [4] - Independent broker/dealers and ETF model providers are seen as growth opportunities by only 13% of respondents each [4] Challenges in Placement - Limited shelf space and the short track record of new ETFs are significant barriers for asset managers in placing their products on broker/dealer platforms [5] - Broker/dealers typically require a minimum asset threshold of approximately $50 million to $100 million in AUM for ETF listings, which not all issuers achieve within the first year [6] Regulatory Considerations - Broker/dealers must adhere to the SEC's Regulation Best Interest rule, which complicates the approval of ETFs with less reliable track records, such as leveraged ETFs or those investing in emerging asset classes like cryptocurrency [7] - Active managers face additional challenges as broker/dealer firms often require a performance track record before approving funds for their platforms [7]

Core Insights - The U.S. Federal Reserve has implemented its first rate cut of 2025, leading to speculation about the pace of future cuts in the capital markets [1] Group 1 - Fixed income investors are particularly focused on the implications of the recent rate cut and potential future cuts [1]

Core Insights - The recent tariff announcements by the president have significantly impacted market dynamics, creating both opportunities and challenges for investors [1][3] - Active ETFs are positioned to adapt more swiftly to tariff news compared to passive funds, which are bound by strict allocation rules [1][2] Active ETFs vs. Passive Funds - Passive international equity funds are constrained by market-cap approaches, potentially favoring larger firms and neglecting smaller firms with higher growth potential [2] - Active ETFs provide greater flexibility in investment strategies, allowing for a broader range of investments across different categories and market capitalizations [2] Investment Strategies Amid Tariff News - The potential for high tariffs necessitates identifying companies with strong cash flows that can withstand increased input costs [3] - Investors facing tax liabilities may consider reallocating equity investments into active ETFs as a strategy for tax-loss harvesting [3] - The uncertainty surrounding future tariffs suggests that incorporating active ETF exposure could be a beneficial strategy for portfolio management [3]

Core Insights - Investors are encouraged to adopt a selective strategy for international exposure rather than relying on broad market indices [1] Group 1 - Companies can benefit from a discerning approach that allows for targeted investments in specific sectors or regions [1] - The flexibility in investment strategies can lead to better alignment with individual risk profiles and investment goals [1]

Core Insights - The active ETF market has emerged as a significant narrative in recent years, with actively managed funds increasing in number and performance, benefiting investors [1] Group 1: Market Trends - Actively managed funds are proliferating, indicating a growing acceptance and demand for active management strategies within the ETF space [1] - The performance of these funds has been notably high, suggesting that they are effectively meeting investor needs and expectations [1] Group 2: Investor Impact - Investors are increasingly attracted to active ETFs due to their potential for higher returns compared to traditional passive funds [1] - The success of active ETFs may lead to a shift in investment strategies, as more investors consider actively managed options [1]

Financial Data and Key Metrics Changes - The company reported a net inflow of $1.5 billion in April, with trends improving in May, despite a challenging environment for U.S. markets [5][7][9] - Operating income grew by 18% year-over-year in the first quarter, with a four percentage point expansion in margins [44] Business Line Data and Key Metrics Changes - Fixed income mandates continue to perform well, particularly in Europe, contributing to the positive net flows [6][9] - Active equity remains a significant revenue source, accounting for over 35% of total revenues, but faces challenges in outperforming benchmarks [25][26] Market Data and Key Metrics Changes - The company has approximately $275 billion in client assets in Asia, with Japan showing significant growth, managing $80 billion, double the amount from four years ago [12][13] - The EMEA region reported $14 billion in flows in the first quarter, with a mix of fixed income and ETFs driving performance [42] Company Strategy and Development Direction - The company aims to simplify and streamline its business while focusing on core activities and markets, particularly in Asia and India [20][21] - The strategic focus includes enhancing the active equity segment and expanding the ETF business, which has shown strong growth [45][49] Management's Comments on Operating Environment and Future Outlook - Management noted that cash on the sidelines remains high, with 20-25% of private wealth clients holding cash, indicating potential for future investment [4][78] - The company is optimistic about the growth potential in Asia, particularly in China, driven by demographic changes and government reforms [12][16] Other Important Information - The company has adopted a hybrid approach for its Alpha platform, which is expected to reduce implementation time and maintain cost efficiencies [87][88] - The partnership with Barings is aimed at expanding alternative credit strategies, leveraging both firms' strengths [55][60] Q&A Session Summary Question: What are the key drivers of your outperforming inflows compared to other players? - The company attributes its success to strong relationships and a long-standing presence in European and Asian markets, which have led to positive inflows despite challenges in the U.S. [8][9] Question: How is the active equity segment performing amid market volatility? - Active equity is crucial for the company, but it faces challenges as managers need to perform in the top quartile to attract and retain clients [25][26] Question: What is the outlook for the ETF business? - The ETF business is expected to continue growing, with the potential for active ETFs to reclaim some market share from passive investments [49][50] Question: How does the company plan to manage expenses moving forward? - The company has successfully reduced expenses while investing in growth areas, and it aims to continue finding operational efficiencies [91][92] Question: What are the capital allocation priorities? - The company plans to focus on investing back into the business, maintaining a payout ratio between 40-60%, and is open to share buybacks as opportunities arise [106][110]