Tracking Error is a feature, not a bug

Decoding active ETFs across continents to help firms outline strategy, price, and differentiators for investors worldwide

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Active ETFs are surging

Two years of sustained growth is driving an active management renaissance with investors. Fund companies continue to develop new active ETFs for a wide range of goals and risk tolerances.

$1.8T
Net assets for active ETFs at the end of 2025
50%+
Annual asset growth over 2024 and 2025
But the truth is, “active” can vary

Until recently, the definition of active management remained static. That’s changing. Investors now need more clarity around what “active” means for a particular fund. Our research indicates that Tracking Error, along with cost and holdings data, is essential to identifying the level of “active-ness” behind an ETF’s investment approach.

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Tracking Error in ETFs sets pricing expectations

Boards around the world now expect high fees to correlate with higher relative Tracking Error. Asset managers will likely need to modify portions of a strategy to meet the desires of different markets.

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Access our active ETF whitepaper

See how differences between ETFs across regions, product types, and the active-passive spectrum can help shape the stories that firms use to attract investors in the US, Europe, and beyond.

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