Investors, though, should be aware that Vanguard Group’s line of ETFs are considered a separate share class of their index-based mutual funds, so Vanguard’s ETFs and mutual funds share the same low fees.
If an investor is seeking the expertise of active management, mutual funds provide a large range of options.
“If that’s what you want, you don’t have that many choices in ETFs, and you have thousands of choices in the mutual fund world,” Michael Iachini, managing director of mutual fund and ETF research for Charles Schwab Investment Advisory, said in the article. “The odds are good, if it’s an active strategy you are looking for, you can find it in a mutual fund. It might not even exist in an ETF framework, and certainly if there’s a specific manager you want, they’re probably not managing ETFs now.”
Nevertheless, the actively managed ETF space is growing, with 122 active U.S.-listed ETFs on the market and $18.3 billion in assets under management. More mutual fund providers are also looking into the space. For instance, the Securities and Exchange Commission recently approved Eaton Vance’s exchange traded managed fund structure. [SEC Approves NASDAQ to List Eaton Vance’s ETMFs]
For more information on investing in ETFs, visit our ETF 101 category.
Max Chen contributed to this article.