Active ETFs Cloned from Mutual Funds: Competing for Investor Flows

42 Pages Posted: 20 Dec 2023

See all articles by Linda Du

Linda Du

University of Texas at Austin - Department of Finance

Laura T. Starks

University of Texas at Austin - Department of Finance

Mindy Z. Xiaolan

University of Texas, Austin - Department of Finance

Date Written: December 5, 2023

Abstract

We examine active ETFs, focusing on the recent innovation of less transparent active ETFs, to understand competition in the delegated asset market, particularly between ETFs and mutual funds. We find no cannibalization of mutual fund investor flows from newly cloned ETFs, rather the better reputation of the cloned mutual funds gives the new ETF advantages in attracting flows over their peers, even without better performance. We provide further evidence that investment companies introduce cloned ETFs for flow diversification -- some of the cloned ETF flows are driven by a clientele difference from their mutual fund counterparts.

Keywords: Active ETFs, non-transparent ETFs, Fund Flows, Competition, Clientele

Suggested Citation

Du, Linda and Starks, Laura T. and Xiaolan, Mindy Z., Active ETFs Cloned from Mutual Funds: Competing for Investor Flows (December 5, 2023). Available at SSRN: https://ssrn.com/abstract=4653702 or http://dx.doi.org/10.2139/ssrn.4653702

Linda Du

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States

Laura T. Starks

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States
512-471-5899 (Phone)
512-471-5073 (Fax)

Mindy Z. Xiaolan (Contact Author)

University of Texas, Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States

HOME PAGE: http://sites.google.com/view/mindyxiaolan

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