New Delhi, July 13 -- Investors are pouring trillions of dollars into actively managed exchange-traded funds, but the increasingly popular products may come at a steep price. Active ETFs often charge higher fees than low-cost index funds, and high fees have long been associated with costly underperformance.

Active ETF assets hit a record $2.5 trillion in May, according to research firm ETFGI. More than 80% of ETF launches were active last year, according to Morningstar. And growth is accelerating: Active ETFs recorded $412 billion of net inflows through May-almost twice the level over the same period a year earlier.

Investors are flocking to ETFs for their daily liquidity, tax efficiency, and access to asset classes like cryptocurrencie...