Paradice launches mid-caps active ETF

Paradice Investment Management has become the latest fund manager to launch an active ETF version of its managed fund.

The firm will launch an active ETF version of its Paradice Australian Mid Cap fund on Cboe, making it easier for advisers and direct investors to access.

Since launching in 2006, the mid-cap fund has gained $2.8 billion in institutional mandates and $103 million in an unlisted retail fund version. 

Cboe has announced it will be exiting Australia and putting the exchange up for sale but Paradice said this should have no effect on the performance of the platform.

Paradice managing director, David Paradice, said the launch of an ETF signals the firm placing a greater emphasis on retail distribution with ETF adoption gaining scale and momentum.

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He said financial advisers across the country had indicated strong demand for the new ETF during recent road shows because of the underlying strategy’s consistent outperformance and the diversification benefits and dynamic market exposure it provided.

Co-portfolio manager Jovana Gagic said a major draw for investors were the meaningful diversification benefits that mid caps provided. 

“In the last 12 months CBA alone has driven 26.8 per cent of the top ASX 50 returns and over the last five years more than 50 per cent of the ASX 50 index returns have come from the big four banks and financials, making portfolios with ASX 50 exposure vulnerable to sector concentration risks.

“Mid caps in contrast, deliver a more balanced sector mix with no single security contributing more than 8 per cent over the past five years. From healthcare and technology to industrials and consumer services, the sector diversity gives investors exposure to more growth engines and less single sector risk.  This broader spread provides access to sector diversity, uncovers growth trends across a variety of areas.”

Paradice Investment Management manages more than $19bn in funds under management in mainly Australian equity funds.

As of mid-2025 actively managed ETFs made up 37 per cent of all ETF listings in Australia but represented just over 15 per cent of ETF industry funds under management.

Many fund managers have been launching their own active ETFs in Australia this year including Perpetual, Macquarie Asset Management, PIMCO and JP Morgan Asset Management.

However, research by Morningstar in its Australian Asset Manager report for Q3 found flows in Australia still remain muted in favour of passive ones. 

“Traditional active managers face continued market share losses, as many still charge high fees that are difficult to justify and unsatisfactory performance. Active managers have launched their strategies via ETFs in response to growing passive competition, yet passive ETFs still attract stronger flows due to their lower fees,” it said.

“Competition is further intensifying as passive leaders like Vanguard and BlackRock also offer actively managed products, leveraging their scale advantage to further compete with traditional active managers.”