Active ETFs
Active Management 2.0 is Here. Are You Ready? Learn why actively managed ETFs are disrupting the mutual fund industry and how you can get started.
While most ETFs simply track an index fund offering low costs and the opportunity to gain market exposure, actively managed ETFs offer the benefits of the exchange traded fund vehicle with opportunities to outperform the market.
Thanks to efforts by the Securities and Exchange Commission (SEC) and innovation among asset managers, active ETFs are outpacing the growth of passive ETFs with strong interest among astute financial advisors and individual investors.
Whether you’re just getting started with Active ETFs or already know the industry landscape, you’ll find useful insights about Active ETFs on Wealthtender. And soon, you’ll also discover top Active ETF managers featured here as well.
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Common Questions
What are active ETFs?
Actively managed ETFs are exchange-traded funds that invest in securities like stocks and bonds chosen by the fund’s manager rather than passively following an index or a rules-based strategy. Often, actively managed ETFs are simply referred to as active ETFs.
As with actively managed mutual funds, the performance of an active ETF is dependent upon the investment selection of the manager whose goal is to outperform a market benchmark. The lower cost of active ETFs increases the likelihood of achieving this goal by reducing the investment returns required by the fund manager.
How do active ETFs compare to mutual funds and passive ETFs
The table below provides a comparison of active ETFs vs active mutual funds, as well as to passive ETFs. You can learn more about the differences between these vehicles in this article on Wealthtender.
Attribute | Active ETFs | Active Mutual Funds | Passive ETFs |
Seeks to outperform the market or its benchmark | Yes | Yes | No |
Relies on the active security selection of a fund manager | Yes | Yes | No |
Tracks an index or popular benchmark | No | No | Yes |
Trades on one or more stock exchanges | Yes | No | Yes |
Can be sold short | Yes | No | Yes |
Can be purchased on margin | Yes | No | Yes |
Tax-efficient structure | Yes | No | Yes |
Relative cost (typical) | Middle | Highest | Lowest |