An Active ETF That’s Topping the S&P 500

Though still a small slice of the exchange traded funds universe, actively managed ETFs are growing. Those funds topped $20 billion in combined assets under management for the first time last month and that total is now north of $20.5 billion.

WBI Investments, a New Jersey-based asset manager, is helping drive that growth and the WBI Large Cap Tactical Growth Shares (NYSEArca: WBIE) is one of the ETF’s helping drive WBI’s and the active space’s ascent. The firm is still in its ETF infancy, having launched 10 active funds in August. However, WBI made a splash by quickly racing to $1 billion in combined assets under management across its 10 ETFs.

Today, the firm is one of the fastest-growing issuers of active ETFs with nearly $1.5 billion in AUM. Only four issuers have more active ETF assets and WBI could easily ascend into the top three this year. The WBI Large Cap Tactical Growth ETF could lead that charge. [Active Large-Cap Idea]

As of April 30, WBIE “produced a total Year-to-Date net return of 3.31%, outpacing the US equity market return of 1.92%, based on the total return of the S&P 500 Index. With total assets under management of $151 million and strong liquidity deriving from an average of 45 thousand shares daily, the Fund seeks seek long-term capital appreciation and the potential for current income, while also seeking to protect principal during unfavorable market conditions,” according to a WBI note.

WBIE’s outperformance is particularly noteworthy because one of the cornerstones of WBI’s methodology is preservation of investor capital during slumping markets. WBI’s management looks to actively participate in the upside delivered by bull markets, but perhaps equally as important is WBIE being “active in an effort to reduce risk to protect capital, and tactical in an attempt to find the best global investment opportunities,” according to the issuer.

WBIE “active strategy aims to deliver reduced beta and correlation to the market while capturing up-market performance and avoiding down-market performance. The Fund outperformed the Index 56% of all trading days during the four months ended 4/30/15, with 48 trading days exceeding the market return and 38 trading days trailing the market return. This results in a healthy 1.3 to 1 win/loss ratio. For the period, the fund had a correlation of 0.88 and a Beta of just 0.80 versus the S&P 500 Index,” said WBI in the note.

While WBIE looks to reduce volatility and can raise cash in times of market stress, that does not mean the ETF’s managers are standing on the sidelines as U.S. stocks continue to climb to record highs. [A new way to Active ETFs]