Active exchange traded funds (ETFs) are going mainstream as the industry’s big names join in to get their share of the pie. This inchoate ETF space has the potential for more growth and innovation with more firms vying for investor interest.

Passive ETFs have paved the way for the active ETF industry, and now big-name brands such as Vanguard, PIMCO, Grail Advisors, Claymore and State Street Global Advisors are getting in on the action, writes Lisa Smith for Investopedia. (What else is planned for these ETFs?)

A range of active strategies can be purchased as a standalone product or mixed and matched to form a portfolio. This will also allow investors the option of choosing between ETFs in passive management, active management or a both.

Active ETFs offers the advantages of mutual funds, such as professional management and low-cost entry, and investors won’t need to personally handle stock selection, trading and performance tracking. ETFs also have the innate perk of lower expense ratios, better tax advantages, trading flexibility and transparency.

Potential investors should note that the growing interest in active ETFs may raise concerns regarding tax efficiency and costs. Active ETFs will reduce tax efficiency and increase costs as the number of trades increase.

For more information on actively managed ETFs, visit our actively managed cateogry. Among the growing number of actively managed ETFs on the market now include:

• Grail American Beacon Large Value (NYSEArca: GVT) is up 4.4% in the last month

• PowerShares Active AlphaQ (NYSEArca: PQY) is up 3.7% in the last month

Max Chen contributed to this article.

Tags: Actively Managed ETFs, ETF 101, GVT, PQY