Active Funds Are Back in the Game—Here’s Why Investors Are Paying Attention

If you’ve been following the investment world, you know passive funds have been the big story for years. Index funds and ETFs that simply track the market have pulled in huge amounts of money, mostly because they’re cheap and easy to understand. But here’s something interesting: active funds, the ones run by managers who pick stocks and bonds, are starting to get more attention again in 2025.

 

Here’s what’s going on:

 

A recent wave of money has flowed into active ETFs. Even though these funds are still a small part of the overall ETF universe, they’re attracting a bigger share of new investments this year. Investors seem to be looking for a little more guidance, especially as markets have become more unpredictable.

 

One reason for this shift is that markets aren’t moving in a straight line anymore. When things get choppy, active managers can adjust their portfolios, avoid trouble spots, and sometimes take advantage of opportunities that index funds miss. This flexibility can help, especially when certain sectors or stocks are getting overheated.

 

Bond funds are a good example. Many active bond funds have outperformed their benchmarks lately, as managers have been able to react to changes in interest rates and credit conditions. That’s drawn in more investors who want someone paying close attention to the details.

 

Of course, not every active fund is a winner, and fees are still something to watch. But the renewed interest shows that many investors still value a thoughtful, hands-on approach—especially when the market feels uncertain.

 

Sources: CNBC, Investopedia, Bandhan Mutual