Exchange-traded funds (ETFs) have traditionally been known for simplifying the investment process for non-professionals while keeping costs low through a passive management approach that tracks indices linked to different strategies. Oddly, though, actively managed ETFs—those not tied to any particular index but with portfolios curated by fund managers, causing them to generally have much higher fees—have grown at a faster pace than their passive peers. Goldman Sachs reports that inflows into active ETFs were about four times stronger than those for passive ETFs last year.
Active ETFs may have greater potential to capture alpha and may employ more complex, sophisticated investment strategies, both of which can appeal to more adventurous investors. Amid the flood of funds on the market today, two actively managed ETFs (and one that resembles an actively managed strategy) may stand out in particular.
