The Institutional Pivot: William Blair Launches First Active ETFs

CHICAGO – October 15, 2026 — In the ongoing quest to align institutional capabilities with the evolving needs of the investing public, the delivery mechanisms of financial strategies matter just as much as the underlying expertise. Today, William Blair Investment Management officially entered the active exchange-traded fund arena, a move that signals a profound shift in how legacy asset managers are adapting to modern portfolio construction.

By launching the William Blair Emerging Markets Equity ETF (WBEM) and the William Blair International Equity ETF (WBIE) on the New York Stock Exchange, the 100% employee-owned firm is repackaging its decades-old global fundamental investment capabilities into a transparent, tax-efficient vehicle. Managing $19.8 billion in emerging markets equities and $18.5 billion in international equities as of June 30, 2026, the firm is no newcomer to non-U.S. investing. Having debuted its first international equity fund in 1992 and emerging markets strategies in 1996, William Blair is now bringing its research-driven approach to an ETF structure that wealth advisors increasingly demand.

"Investors are increasingly building portfolios with ETFs, and they want to access active strategies in the structure they prefer," said Bob Kendall, Global Head of William Blair Investment Management. "These active ETFs are an evolution in how clients can access capabilities we have offered for decades. They reflect our belief that investors should have flexibility in how they access our investment expertise—across international and emerging markets today, and across additional asset classes over time."

The Institutional Pivot: Adapting to the ETF Tide

The asset management industry is in the midst of a secular migration. Trillions of dollars have steadily moved from traditional mutual funds into exchange-traded funds, driven by the latter's intraday liquidity, lower costs, and superior tax efficiency. For legacy boutique asset managers who have long dominated institutional accounts and mutual fund platforms, the pivot to active ETFs is no longer an optional experiment; it is a vital modernization effort to remain relevant with retail Registered Investment Advisors and tax-sensitive wealth platforms.

Active ETFs saw their total assets surge to nearly $1.5 trillion in 2025, growing an astonishing 64% in a single year. To compete with industry giants like Capital Group and Dimensional—firms that have already made aggressive and successful pushes into active ETFs—William Blair must offer its fundamental strategies in the wrapper that the modern market demands.

As one independent Registered Investment Advisor consultant noted, the creation and redemption mechanisms of ETFs provide a distinct advantage. Unlike mutual funds, which often must sell underlying assets to meet investor redemptions—thereby triggering capital gains taxes for remaining shareholders—ETFs utilize an "in-kind" redemption process. This structural advantage makes the transition to ETFs a necessity for managers aiming to preserve their asset base and attract new capital from tax-conscious investors.

Finding the Edge in Emerging Markets

The dual launch of WBEM and WBIE highlights a critical debate in modern portfolio construction: the viability of active stock picking versus passive indexing, particularly in international and developing economies. While passive ETFs tracking broad indices like the MSCI EAFE or MSCI Emerging Markets offer ultra-low expense ratios, they often blindly expose investors to state-owned enterprises with poor corporate governance, volatile geopolitical risks, and bloated sectors.

Emerging markets are historically less efficient than their U.S. counterparts. They are characterized by thinner third-party research coverage, unpredictable regulatory environments, and vast disparities in market conditions. This inefficiency creates a fertile landscape for bottom-up, fundamental security selection. Active managers can exploit these gaps, adding value and managing risk in ways that a capitalization-weighted index simply cannot.

William Blair’s existing mutual fund strategies illustrate both the potential and the challenges of this active approach. The firm’s Emerging Markets Growth Fund Class I, for instance, posted a year-to-date return of 27.72% as of September 30, 2026, outperforming its benchmark index, which returned 22.04%. By prioritizing quality and growth characteristics, active managers can navigate political instability and currency risks more deftly. Conversely, the William Blair International Growth Fund Class I has faced recent headwinds, returning 10.32% year-to-date compared to its benchmark's 13.83%, underscoring the inherent challenges and cyclicality of active management.

"Each strategy is built with the investor in mind, and the role of each strategy in a portfolio," said Jay Lisowski, Global Head of Product Strategy and Development at William Blair Investment Management. "The ETF wrapper adds increased tax efficiency, intraday liquidity, and transparency on top of an active approach investors already know—making it easier to incorporate active international and emerging markets strategies into modern portfolios."

Despite the structural benefits, the firm will face intense fee pressure. Competitors like Avantis offer emerging market active ETFs with gross expense ratios as low as 0.33%, while Capital Group’s international equity ETF charges 0.54%. For William Blair’s new fully transparent offerings to gain significant traction, they will need to continually demonstrate that their proprietary research and active alpha justify their fee structure in a highly competitive landscape.

A Blueprint for a Broader Ecosystem

The debut of WBEM and WBIE is not merely a standalone product launch; it serves as the foundation for a much broader platform ambition. The Chicago-based firm has explicitly signaled its intent to expand its ETF lineup over time, targeting U.S. equities, global equities, and emerging market debt. This multi-asset expansion plan reveals how employee-owned partnerships are scaling their distribution in an increasingly consolidated ETF provider market.

By maintaining its independent operating model and distributing the funds through its own broker-dealer arm, the firm is leveraging its existing institutional infrastructure to build a comprehensive ETF ecosystem. Wealth advisors increasingly prefer to consolidate their model portfolios with a select group of trusted asset managers who can provide a full suite of strategies. By moving beyond international equities and planning a full menu of active ETF options, the firm is positioning itself to capture a larger share of these holistic advisor allocations.

Furthermore, the firm's 100% employee-owned structure may offer a strategic advantage. Unlike publicly traded asset managers who often face relentless pressure to gather assets quickly to satisfy quarterly earnings expectations, independent partnerships can afford to take a longer-term view. They can seed new strategies, allow track records to mature, and focus on disciplined portfolio construction without the immediate glare of public shareholders.

As the financial landscape continues to evolve, the successful integration of institutional-grade research with retail-friendly delivery mechanisms will separate the resilient asset managers from those left behind. The launch of these first two active ETFs proves that even the most established legacy institutions recognize the necessity of adapting their delivery methods to meet the modern investor where they are.