The explosive growth of active ETFs — and what it means for you

Photo credit: Canva

By Harry Justus, Communications Consultant

Until recently, most investors have seen passive ETFs as preferable to their active counterparts. Not anymore, according to new data compiled by Bloomberg: this year alone, “exchange-traded fund issuers have this year launched 115 active products versus just 51 passive funds.” This signals that active ETF investing is establishing itself as an emerging mega-trend, with a range of options available for brokerages and retail investors alike.

This new explosion of active ETFs is a new development that coincides with a massive overall increase in the number of ETFs in general. According to Statista, “the number of exchange traded funds worldwide [grew] an astonishing 2,650 percent between 2003 and 2020.” 

Instead of having to rely on passive ETFs, investors of all types —retail, professional and institutional— can invest directly when they are convinced the product is suitable for them. Our aim at Coherra is to bring you the best and most relevant financial information out there, and this new active ETF boom means that asset allocators have more choices than ever in how to invest their money. This is reflected in the NYSE’s ETF Quarterly Report, which found a $33 billion USD year-over-year increase in active ETF cash flow from Q1 2020 to Q1 2021.

Source: NYSE ETF Quarterly Report

The relationship between investors and asset managers has undergone a paradigm shift in terms of how these actors find each other. The digital space is now the key to building these relations, especially since digital investments can mean that asset managers never actually meet their investors. Moreover, digital platforms allow asset managers to access investment products around the world, smoothing much of the friction and crossing the borders that come with traditional investments.

Now, while we may have transcended physical borders for investing, language barriers remain. Localization of video content through translation of text and audio content opens new doors for our clients to bring their products to previously untapped audiences. 

Take our client AuAg Fonder, for example. They started in Sweden, where they have managed to accrue over $150 million USD from 30,000 Swedish retail investors in only one year— without any meetings. They’ve already expanded to the rest of Scandinavia by adopting a communications strategy that delivers their content in a country’s own language— for example, here’s a video we produced for them in Danish for their expansion to Denmark. 

AuAg is launching an ETF on the London Stock Exchange on July 7th, and on the Frankfurt Stock Exchange the following week. These new listings will make this ETF available to more than 50 million potential new investors across Europe. We at Coherra have been working with AuAg to produce a video that is now being translated into English and German in order to best appeal to new investors. We want to show the fintech world that video localization done right can be a major catalyst for growth. 

So what does this mean for us, and more importantly, for you? We’ve long known that the future of investment lies not only in the boardroom, but online. The relationship between investors and asset managers has undergone a major shift, and the digital space is now the key to building these relations, especially since digital investments can mean that asset managers never actually meet their investors. In fact, some of our clients who work with ETFs have found that over 70% of their assets under management (AUM) are unaccounted for. That’s why video content is now so important for asset managers to nurture their virtual relationships with their investor clients— and that’s exactly what Coherra is here for.  The new arena for investor relations is online communications, and Coherra is here to help you come well-armed. Keep an eye out for our next post on how Coherra is perfectly positioned to help you take advantage of the rise of digital information sharing platforms like Clubhouse, Reddit, and others. Learn more at our website and see how we can help you optimize your asset management.

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