ETF Prime: Rosenbluth on Semitransparent Active ETFs & More

On this week’s episode of ETF Prime, host Nate Geraci sat down with VettaFi’s Head of Research Todd Rosenbluth to discuss Bitwise’s XRP filing, semitransparent active ETFs, and CLOs. Later, Geraci welcomed Palmer Square founder Chris Long to discuss the $32 billion firm’s ETF entrance.Bitwise last week filed to launch an XRP ETF, creating waves in the industry. 2024 has been a big year for crypto ETFs, with spot bitcoin and spot ether ETFs both getting regulatory approval.  Rosenbluth said crypto ETFs have had much more staying power than he had expected. The iShares Ethereum Trust ETF (ETHA ) is about to cross over $1 billion in assets, according to Rosenbluth, and eight bitcoin ETFs have over $1 billion in assets. “The fee waivers came and went, and I don’t even think we noticed it as an industry. Money has just stayed with these products. So clearly there’s staying power,” he added.Interest in CLO ETFs GrowsCLOs were off on their own island until recently, Rosenbluth said, and many ETFs investors had no exposure to CLOs. “You don’t get exposure to CLOs in the Agg; these are fixed income instruments with unique characteristics,” he added. Rosenbluth pointed to Janus Henderson, which has one of the most successful, active fixed income ETFs overall. The Janus Henderson AAA CLO ETF (JAAA A-) has grown significantly in the past year. The fund has $13 billion in assets as of Oct. 7 compared to around $4 billion one year prior.  VanEck is another firm that had success with its CLO ETFs. The firm has the $570 million VanEck CLO ETF (CLOI A) and the recently launched VanEck AA-BB CLO ETF (CLOB). Panagram is another firm that has had success in the CLO ETF arena. “They were an institutional manager that entered the ETF market using their expertise in CLOs,” Rosenbluth said.Active ETFs Continue to Gain Market ShareOver 1,300 actively managed ETFs have launched since 2019, according to J.P. Morgan Asset Management’s Guide to ETFs. Notably, 70% of new ETFs in the last four years have been actively managed ETFs, Rosenbluth said. Regulations changed to make it easier and faster to bring active ETFs to market. In response, leading firms in the active space, primarily in the mutual fund space, have entered the ETF marketplace in the last few years, Rosenbluth noted.  These active managers that have expanded in the ETF space in recent years include Capital Group, Fidelity, Dimensional Funds, T. Rowe Price, and even BlackRock.  There has been healthy investor demand for active ETFs. “We’re going to have probably 30% of the overall flows continue to come from active ETFs,” Rosenbluth said. Active ETFs still make up less than 10% of the ETF asset base, but assets in active ETFs keep climbing as the segment punches above its weight. Some active ETF managers initially went the semitransparent active ETF route and have since launched fully transparent active ETFs, including T. Rowe Price and Fidelity. However, Rosenbluth will not write off the semitransparent active ETF structure. He pointed to the firms’ success with their existing semitransparent active products. The Fidelity Blue Chip Growth ETF (FBCG C+) has $2.2 billion in assets under management. Additionally, T Rowe Price has a few semitransparent ETFs that are over $500 million. “The ETFs are living and breathing and outperforming the broader benchmark,” he said.  The active ETF launches that have stood out the most to Rosenbluth this year include State Street Global Advisors’ target maturity ETFs like the SPDR SSGA My2026 Corporate Bond ETF (MYCF). Additionally, the NEOS Russell 2000 High Income ETF (IWMI ) is an interesting small-cap covered calls ETF. Finally, Fidelity expanding its active Fundamental ETFs suite is exciting for the industry, Rosenbluth said.Bringing Palmer Square’s CLO Experience to ETFsPalmer Square founder Chris Long joined ETF Prime to discuss the Credit Opportunities ETF (PLQO) and the CLO Senior Debt ETF (PSQA). The firm first attempted to bring a CLO-focused ETF to market in 2015, Long said, which was shut down by the SEC. The firm’s CLO ETFs launched in September 2024. PSQA is passive and mirrors Palmer Square’s CLO index. PSQA offers 75% AAA exposure and 25% AA, therefore offering a premium yield to it relative to other products in the market, Long said. The fund focuses on the most liquid issues that also we believe trade with much less volatility, Long added.  PSQO is a multi-asset, actively managed, transparent ETF. “We’re using our best ideas at Palmer Square across bank loans, CLOs, investment grade, high yield, really allowing an investor to not have to worry about being so tactical, depending on how spreads are moving, because we’re really doing that for them,” Long said. For more ETF Prime podcast episodes, visit our  ETF Prime Channel.