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Why are active ETFs gaining momentum?

Active ETFs are rapidly becoming a dominant force in asset management. In 2025, they accounted for 86% of all new U.S.-listed ETF launches, underscoring their accelerating adoption.1

Potential for Better Outcomes

Active ETFs give portfolio managers the flexibility to pursue opportunities based on research-driven insights—rather than simply tracking a benchmark like passive ETFs. This approach can help manage issuer-level concentration risk and adapt to changing market conditions.

Backed by global research expertise

Managed by Franklin Templeton investment professionals, these strategies are supported by global research teams with more than 75 years of experience delivering active investment solutions across market cycles.

The advantages of active management in an ETF

Active ETFs combine professional portfolio management with the structural benefits of the ETF wrapper, including:

  • Potentially lower operating costs
  • Intraday trading flexibility
  • Greater portfolio transparency
  • Operational efficiency under the ETF Rule2

Together, these features help make active ETFs a cost-efficient and flexible alternative to traditional mutual funds

Active ETFs

Available across fixed income, equity, multi-asset, and alternative asset classes

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Frequenty asked questions

An ETF (Exchange Traded Fund) is an investment fund that holds a group of securities, such as stocks or bonds. ETFs are traded on a stock exchange, which means they can be bought and sold in a similar way to listed shares. ETFs have become popular because they offer transparent and cost-efficient access to different markets and investment themes.

An active ETF is managed by an investment team that makes decisions about which securities to buy or sell, rather than simply tracking an index.

  • Portfolio managers may invest beyond index limits based on research and analysis
  • The aim is to respond to changing market conditions
  • Active ETFs seek to achieve better outcomes than broad market exposure, although results are not guaranteed

Diversification – Investors gain exposure to many securities within a single fund

Intraday Trading – ETF shares can be bought and sold throughout the trading day at market prices

Cost Efficiency – ETFs often have lower ongoing fees than traditional investment funds, although brokerage costs may apply

Low starting amount – There is usually no minimum investment amount other than the price of one ETF unit

Transparency – ETFs typically disclose their holdings on a daily basis

Liquidity – ETFs are traded on exchanges and supported by market makers, helping investors buy and sell more easily

Individual Investor – Buys and sells ETF units through a brokerage account

ETF Sponsor – The financial institution that creates and manages the ETF

Authorized Participant (AP) – An institution that helps create and redeem ETF units

ETF Market Maker – A firm that supports trading by providing buy and sell prices on the exchange

No. With savings plans, even small amounts can be invested regularly – efficiently, automatically, and in a disciplined way.

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Footnotes: 

  1. Data as of 31 July 2025.
  2. Source: U.S. Securities and Exchange Commission, as of 13 Jan 2021.

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