What Drives Active ETF Growth? NEOS and Thornburg Weigh In

• Growth is driven by innovative strategies enabled by the ETF wrapper, availability in previously inaccessible asset classes, plus inherent ETF benefits like transparency and tax efficiency
• Experts agree active and passive ETFs can coexist in portfolios, serving different needs such as income generation versus low-cost market exposure
• Both active and passive funds can function as either strategic long-term holdings or tactical short-term positions, with firms like Thornburg focusing on solutions-based approaches rather than debating one versus the other

Summary

Active ETF Growth and Market Dynamics

Despite representing only 10% of total ETF market assets, actively managed ETFs are experiencing substantial monthly fund flows and continued momentum. This trend was discussed at a VettaFi webcast on June 17, 2026, featuring experts from NEOS, Thornburg Investment Management, and other firms.

Key Drivers of Demand

Richard Kuhn, Head of Product at Thornburg Investment Management, identified two primary factors fueling active ETF growth:

• Innovation: Active ETFs offer compelling strategies enhanced by the ETF wrapper structure
• Availability: Many asset classes previously unavailable through active management are now accessible

Kuhn emphasized that the ETF structure's inherent transparency and tax efficiency create a "perfect storm" for growth when combined with innovative strategies.

Active vs. Passive Debate

Industry experts consensus indicates both active and passive strategies have legitimate roles in investor portfolios:

NEOS Perspective: Wes Matthews, CFA, Senior Managing Director at NEOS Investments, explained that active and passive funds complement each other by addressing different investor needs. NEOS specifically focuses on generating sustainable, predictable, tax-efficient income while maintaining market exposure. Matthews noted that allocators typically maintain "cheap beta" positions while dedicating portfolio sleeves to income-generating active strategies.

Thornburg Perspective: Kuhn agreed that both approaches deserve portfolio positions, noting they can serve as either strategic long-term holdings or tactical short-term exposures. Rather than debating active versus passive merits, Thornburg concentrates on delivering solutions-based investment approaches.

Market Implications

The growing acceptance of active ETFs suggests continued product innovation and expanded investor choice, with both active and passive strategies playing complementary roles in modern portfolio construction.