Here Are the Top Active ETFs Used by Advisors

Active ETFs have firmly established themselves as the cool, new kids on the block, with asset managers launching nearly 1,000 products last year alone. While registered investment advisors still rely heavily on passive funds for their low costs and diversification, many are increasingly incorporating active ETFs into portfolios, and a few firms are standing out.

JPMorgan is king, issuing three of the top five active funds preferred among RIAs, and that concentration is reflective of a wider trend across firms. “The list is dominated by relatively few asset managers, indicating that brand familiarity and established advisor relationships remain key drivers of adoption in the active ETF market,” said Rich Donnellan, vice president of marketing at data firm Fintrx.

And the Winner Is …

Active ETF adoption has surged, especially among independent RIAs. In early 2021, these advisors held about $28 billion in active ETFs. By the end of last year, that figure had climbed to nearly $400 billion, according to Fintrx.

The types of strategies advisors favor help explain that growth. RIAs tend to gravitate toward active ETFs focused on income generation, cash management and tax-efficient core exposures. These align with ongoing client demand for yield, liquidity and diversified long-term portfolios. Fintrx data shared with Advisor Upside showed that the top five most popular active ETFs among all RIAs, include:

• JPMorgan Equity Premium Income ETF (JEPI) — Some 1,200 RIAs have allocated a combined $14.5 billion to the fund.
• JPMorgan Ultra-Short Income ETF (JPST) — Nearly 1,050 firms hold about $20.5 billion in assets.
• Dimensional US Core Equity 2 ETF (DFAC) — Just over 1,000 RIAs account for roughly $30 billion of the fund’s AUM.
• Avantis US Small Cap Value ETF (AVUV) — Around 860 firms have invested a combined $12.5 billion.
• JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) — More than 800 RIAs have committed $7.7 billion to the fund.

Not So Fast. Active ETFs may be gaining ground with RIAs, but plenty of advisors still remain cautious as the funds tend to underperform their passive counterparts over long periods. “We do use active ETFs, but very selectively,” said Sean Beznicki, director of investments at VLP Financial Advisors. “We’re not going out and ‘shopping’ the ETF universe from scratch.” His firm typically allocates to ETF share classes built from mutual funds it’s already vetted and used for years. “It gives us a bit more confidence sticking with what’s familiar, while still picking up the added benefits of the ETF structure,” he told Advisor Upside.