5 Things Advisors Need to Know About Actively Managed ETFs
March 26, 2012 2:09 PM
5 Things Advisors Need to Know About Actively Managed ETFs<br><br>
Less than five years after their debut, actively managed exchange traded-funds whether rules-based or selected by actual human beings are still a bit player in the overall ETF universe, accounting for roughly $5.2 billion in assets at the end of 2011 according to AdvisorShares.
Thats a drop in the bucket compared to their index-based ETF brethren which hold more than $1.05 trillion in investor assets.
But actively managed ETFs are on the come. AdvisorShares, a leading-sponsor of actively-managed ETFs and one of the first firms to apply for exemptive relief status with the SEC, currently offers 13 actively-managed ETFs via the NYSE Arca.
In February, PIMCO launched its Total Return Exchange-Traded Fund (TRXT), just the latest sure sign that these funds are starting to come of age.
Source: AdvisorShares
Thats a drop in the bucket compared to their index-based ETF brethren which hold more than $1.05 trillion in investor assets.
But actively managed ETFs are on the come. AdvisorShares, a leading-sponsor of actively-managed ETFs and one of the first firms to apply for exemptive relief status with the SEC, currently offers 13 actively-managed ETFs via the NYSE Arca.
In February, PIMCO launched its Total Return Exchange-Traded Fund (TRXT), just the latest sure sign that these funds are starting to come of age.
Source: AdvisorShares
1. Theyre Young But Theyre Growing Fast<br><br>
The active ETF space is young and only beginning to scratch the surface of the $1 trillion-plus ETF industry. But when comparing the first four years of both active and passive ETFs, the asset growth of active ETFs ($5,280,000,000) has more than doubled passive ETFs ($2,411,000,000).
2. Best of Both Worlds<br><br>
Active ETFs are unique investment vehicles that offer actively-managed strategies. But they are also are also more easily accessible than a mutual fund, giving investors the ability to quickly react to changing markets, while also providing more liquidity, tax efficiency and transparencyall within an ETF structure.
3. Theyre Whats Hot Now<br><br>
During 2011, when mutual funds lost assets totaling more than $76 billion, assets in active ETFs increased more than $2.2 billion. (Sources: Financial Products Research and Morningstar)
4. Not Your Fathers ETF<br><br>
Active ETFs are significantly different from traditional passive ETFs because they allow investors to participate in an actively managed portfolio strategy that could range from tactical to traditional asset allocation and from sophisticated currency strategies to emerging markets.
5. Worldwide Appeal and Opportunities<br><br>
Active ETFs provide opportunities for investment management firms of all sizes to bring their expertise to the masses through a ticker symbol that can be accessed globally via exchanges such as the NYSE.
