The benefits of actively managed ETFs

Investors increasingly turn to exchange-traded funds (ETFs) to access asset classes and investment strategies. According to research firm ETFGI, global ETF assets under management grew by more than 30% in 2017 to US$4.3 trillion.

One type of ETF that has seen particular interest from investors is the actively managed ETF. These funds are managed by portfolio managers who use their expertise and experience to select stocks or other securities that they believe will outperform the market.

What are actively managed ETFs?

An actively managed ETF is a type of exchange-traded fund managed by a professional portfolio manager. These funds are designed to outperform the market and provide investors with a higher return.

Actively managed ETFs offer many benefits for investors, including:

Professional management:

By investing in an actively managed ETF, you gain access to the expertise and experience of professional portfolio managers. These managers use their knowledge and experience to select stocks or other securities that they believe will outperform the market.

Diversification

Actively managed ETFs offer investors the ability to diversify their portfolios by accessing a wide range of asset classes, including equities, fixed income, and alternative investments.

Transparency

One of the key benefits of ETFs is transparency. With an actively managed ETF, you can see what the fund is holding and how it is performing. This transparency allows you to make informed investment decisions and helps you to avoid any surprises down the road.

Flexibility

Active management gives investors more flexibility than passive investing strategies. For example, suppose an investor believes that a particular sector is about to experience a downturn. They can sell their holdings in that sector and move their money to another market part.

Lower costs

Actively managed ETFs often have lower expense ratios than traditional actively managed mutual funds. ETFs are more efficient to manage, and there are no loads or commissions charged on them.

Tax efficiency

One of the key benefits of ETFs is that they are tax-efficient. Investors can defer or reduce their tax liability by investing in ETFs.

Liquidity

ETFs are highly liquid investments, which means you can sell them quickly and at a fair price. This liquidity is another reason investors increasingly turn to ETFs as an investment vehicle.

Efficiency

ETFs are very efficient investments, so you don’t have to pay high fees to access them. In addition, they are easy to trade, which makes them a good option for investors who want to be active in the market.

Portability

Another benefit of ETF s is that they are portable. If you move to another country or invest in a foreign market, you can take them with you. ETFs are also flexible, making them a good choice for investors who want to have the freedom to choose how they invest their money.

Accessibility

ETFs are becoming increasingly accessible to investors. Many online brokerages offer ETFs, and some even offer commission-free trading. This accessibility makes ETFs an attractive investment option for many people.

Choice

With more than 2,000 ETFs available, investors have a wide range of choices when investing in these funds. It gives investors the ability to select the ETF that best suits their investment goals and objectives.

Simplicity

ETFs are simple to understand and easy to invest in. It makes them an ideal investment for people who are new to investing or don’t have the time to research individual stocks.

In conclusion

The benefits of actively managed ETFs make them an attractive investment option for many people. However, it is essential to remember that there are also risks associated with these funds. Before investing in any ETF, do your research and understand the risks involved.