What are active ETFs?

While active management has a long history in the mutual fund world, active strategies are a relatively new concept within the ETF market. The evolution of active ETFs would not be that surprising, however, when you consider that asset managers are responding to the growing demand and broad adoption of the ETF structure. As the range of strategies expands, active ETFs could be seen as a natural extension to existing passive and smart beta approaches.

The term “active ETFs” encompasses a wide range of strategies, but the simplest way to think about this category of ETF is that they don’t aim to replicate a benchmark but instead are designed to meet specific objectives such as alpha…