All is not quiet on the Western front when it comes to the battle between actively managed exchange traded funds (ETFs) and mutual funds.
One clear advantage active ETFs have over mutual funds is cost, report Jaclyne Badal and Leslie Scism for the Wall Street Journal. For example, the expense ratio for the PowerShares line is 0.75%, while Morningstar notes that the average mutual fund expense ratio is 1.34%.
But where mutual funds may display an advantage for the time being is familiarity. After all, name brand and performance over time has long been established within them, while many investors seem to be waiting to see if active ETFs deliver the goods before they jump in.
Active ETFs also face some real competition, as there are some low-cost and tax-efficient mutual funds with solid track records out there. They also face hurdles with the strategies for stock-picking they employ, which are largely untested.
