Investors are shifting funds from actively managed mutual funds to ETFs due to lower fees and better tax efficiency.

Investors are increasingly moving money into actively managed exchange-traded funds (ETFs) while pulling funds out of actively managed mutual funds due to lower fees and better tax efficiency offered by ETFs. Active ETFs saw positive inflows from 2019 to 2023 and are on track for another positive year in 2024. In contrast, active mutual funds have experienced outflows, losing $344 billion in the first 10 months of 2024. This shift is driven by the cost advantages of ETFs, which also benefit from a rule change in 2019 that allowed more mutual funds to convert into ETFs.

November 27, 2024
15 Articles