After years of declining fees, active management is driving exchange-traded funds to charge more.
Investment managers are launching a record number of active ETFs in 2025. These funds come with higher costs compared to passive index trackers.
The shift marks a departure from the long-term trend of falling fees. Passive funds previously dominated the market with low-cost strategies.
Active ETFs require more frequent trading and research. Managers argue this justifies the higher expense ratios for investors.
New launches include funds focused on specific sectors and strategies. Many target areas where managers believe they can outperform benchmarks.
Investors are showing increased appetite for these products. Flows into active ETFs have risen significantly this year.
The trend could reshape the ETF industry’s fee structure. Traditional low-cost models are facing renewed competition from actively managed alternatives.
Regulators are monitoring the development closely. Fee disclosures remain a key focus for investor protection.
