Fuse Blog

Actively Managed Open-End Funds and ETFs: Surprisingly Similar Long-Term Success Rates

  • Managers of actively managed open-end funds have digested the significant headwinds these products face. Launches are at a low point, with just 113 of the 510 funds launched in 2023 through October falling into this category.
  • On the other hand, active ETFs comprised 291 of this year’s launches.
  • However, long-term success rates for both vehicles paint a surprisingly similar picture (despite the smaller sample size for active ETFs) when reviewing launches between 3Q12 and 3Q17:
    • Roughly 82% of either vehicle will fail to achieve meaningful scale ($250M AUM) within five years.
    • 11% will reach $500 million in AUM within five years, falling to 6% of open-end funds and 7% of ETFs reaching $1 billion in AUM.
    • 49% of actively managed open-end funds are no longer operational compared with 43% of actively managed ETFs.

Actively Managed Long-Term Open-End Mutual Fund and ETF Success Rates

Blog Exhiibt 2 11.28.23

Source: Morningstar, FUSE Research Network