Analysts also include the degree of risk aversion and the larger spread of outcomes that an actively managed fund may endure. These adjustments are actually penalties for risk regarding active management. [Active ETFs:Next Big Thing for Fund Managers?]
For long-term investing, however, the ability to trade intraday is not that valuable, Stephan Horan, head of the CFA Institute said. “Some folks, for example Jack Bogle, argue that simply the temptation to trade during the day is negative attribute of ETFs,” Horan said. “Others argue that the added flexibility cannot make investors worse off. It boils down to how important one believes the behavior biases are.” [ETF Spotlight: Actively Managed Funds]
Overall, it is hard to beat the performance of passive ETF investing against active management with these funds, over the long term. The comparisons of both categories are complicated and vary greatly.
Tisha Guerrero contributed to this article.