Exchange traded funds (ETFs) have been building up to become one of the hottest investment tools available. Active management seems like it is the next phase of development on their upward journey. Product providers have yet to deliver the first true actively managed ETF, reports Rebecca Knight for Financial Times, they are the talk of every ETF conference around.
Currently, there is an onslaught of "semi-active" ETFs arriving to the market, which are basically alternative weighting strategies. Providers have been moving away from market capitalization and in this way many ETFs have evolved into somewhat of an active strategy. The main issues with an actively managed ETF involve maintaining transparency, and cost effectiveness. The rest are technical details that can be worked out over time. But the question is do ETF investors want an actively managed ETF? Isn’t the point of an ETF to follow an index?
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.