Why active and fixed income ETFs are gaining momentum

The discussion focuses on the rapid growth of active ETFs, driven by investor appetite for thematic exposure beyond the Magnificent Seven. TCW's Jennifer Grancio explains that long-term structural themes like AI and power infrastructure are ideal for active management, while Todd Rosenbluth notes that advisers are using AI thematic ETFs as a modern alternative to traditional sector overweights. - Active ETF flows rose to 40% of total in 2025, up from 10% last year, highlighting a major shift from passive indexing. - TCW launched AI (AIFD) and Power (powered) active ETFs to capture multi-decade structural themes driven by the AI buildout. - The AI ETF is designed as a broad, multisector strategy that avoids narrow subsector tinkering. - Advisers can allocate roughly 10% from core equity holdings into these two long-term thematic ETFs. - Todd Rosenbluth points out that thematic AI ETFs are replacing sector ETF overweights because they span technology, utilities, and industrials. - ETFs like THNQ and NUKZ are examples, with ongoing innovation in even narrower slices such as photonics ETFs. - The conversation emphasizes that active management within broad themes saves investors time while seeking outperformance.