Actively-managed ETFs have a fund manager who aims to beat the benchmark index with selective stock buying and selling.
Actively-managed ETFs are different than most ETFs. Most ETFs practice “passive” fund management. Traditional ETFs stick with this passive management—they follow the lead of the sponsor of the index (for example, Standard & Poors). Sponsors of stock indexes do from time to time change the stocks that make up the index, but generally only when the market weighting of stocks change. They don’t attempt to pick and choose which stocks they think have the best prospects.
The MER (Management Expense Ratio) is generally much lower on passive ETFs than on conventional mutual funds or actively-managed ETFs. That’s because most passive ETFs take a much simpler approach to investing. Instead of actively managing clients’ investments, ETF providers invest to mirror the holdings and performance of a particular stock-market index.
Many brokers and portfolio managers have built a business around putting their clients into actively-managed ETFs—and making frequent changes in their ETF holdings. Their sales literature focuses on how easy it is to invest and profit in these investments.
It’s a great marketing gimmick, but it subverts the prime advantage of ETFs, which is low cost.
By the time the ETF specialists add their fees and commissions to actively-managed ETFs, their clients are paying the equivalent of mutual fund MERs to buy what amounts to a hodge-podge of index funds.
Learn about the costs of investments like actively-managed ETFs by following TSI Network. Maximize your investment gains by using our three-part Successful Investor strategy:
Invest mainly in well-established companies;
Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities);
Downplay or avoid stocks in the broker/media limelight.
The safest investment funds in Canada are Canadian funds like ETFs or mutual funds that aim to equal the performance of a Canadian market index.
Canadian funds, specifically, index funds, are among the better financial innovations to come along in the past few decades. The best Canadian… Read More
This month, we highlight two actively managed ETFs from Middlefield Group that were recently converted from closed-end funds.
MIDDLEFIELD INNOVATION DIVIDEND ETF $11.43 (Toronto symbol MINN) invests in companies that derive a major portion of their revenue from products or services related to major technological innovations.
The ETF is actively… Read More
Canadian ETFs had another outstanding year in 2021. By the end of the year, there were 1,177 listed funds with a total asset base of $323 billion. On both counts, these were all-time highs.
The long-term growth in the industry continues to accelerate. Ten years ago… Read More
This month we look at two actively managed ETFs launched earlier this year by TD Asset Management. TD’s share of the the Canadian ETF market remains small, but the bank has increased its new offerings this year.
TD ACTIVE GLOBAL EQUITY GROWTH ETF $15.67 (Toronto symbol TGGR) aims… Read More
For some time, most U.S. fund managers have focused on offering passive ETF management (more on that below). They do not offer actively managed ETFs because of the reluctance of those funds to meet daily disclosure requirements on portfolio actions.
Meanwhile, in Canada, the rules and… Read More
Corrections have been a routine occurrence throughout stock market history. These periods of volatility and economic uncertainty are challenging for investors to navigate but frequently offer excellent investment opportunities for long-term gains.
However, the market disruption that started in mid-February has been an extraordinary event, both… Read More
The first quarter of 2020 will go down in the history books as one of the most volatile ever recorded. After reaching an all-time high in mid-February, global equities declined precipitously only to bounce at least part way back in late March. At the same… Read More
BMO launched seven environmental, social and governance (“ESG”) funds on January 21, 2020; these include a balanced fund, equity funds, and bond funds. Here’s a look at two of them:
Sustainable investing offers some investors a lot of conceptual and emotional appeal. But does investing in… Read More
The cost to stabilize the U.S. economy during the COVID-19 pandemic is going to be enormous. The current fiscal package signed by President Donald Trump carries a price tag of $2.2 trillion but there is already talk of follow-up programs.
Estimates now indicate that the U.S…. Read More
The United States has been the world’s leading economy for many decades.
Despite the rapid progression of the Chinese economy and challenges posed by the COVID-19 pandemic, we think U.S. companies will continue to offer ETF investors unparalleled opportunities.
VANGUARD U.S. TOTAL STOCK MARKET ETF $52.19 (Toronto symbol… Read More
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