Capital Group’s Framsted on Active Fixed Income ETFs

Capital Group is one of the largest asset managers in the world, with some very large ETFs. That said, it still has 14 ETFs per VettaFi’s ETF Database. That makes the firm one to watch in the ETF space especially given its “Capital System.” VettaFi sat down with Capital Group’s head of global product strategy and development Holly Framsted at the ETF Exchange conference in Miami to discuss the firm’s recent survey about active fixed income ETFs.

That recent survey found that a limited understanding of active fixed income ETFs and a limited supply of those ETFs have likely been the key drivers behind an AUM mismatch between active fixed income mutual funds and active fixed income ETFs.

That mismatch has led to just 4% of managed assets sitting in active fixed income ETFs. Just 12% of fixed income ETF assets are active compared to 78% of fixed income mutual fund assets, Framsted said. The firm interviewed some 400 financial advisors in putting together its survey.

“Financial advisors didn’t really appreciate that the vehicle benefits, liquidity transparency, tax efficiency, convey to both asset classes,” Framsted noted. “There’s no reason why you can’t have active fixed income in an ETF structure.”

“We plan on spending a lot of time this year focused on adding education around active fixed income ETFs to our portfolio of value-add services that we provide to financial advisors,” she added.