A New Active ETF Puts the Manager's Money Where His Mouth Is

AdvisorShares has come out with a new actively managed stock exchange traded fund with a dynamic fee structure that aligns the manager’s incentive with shareholders’ interests.

On Wednesday, AdvisorShares launched the AdvisorShares Focused Equity ETF (NYSEArca: CWS).

CWS is managed by Eddy Elfenbein. Elfenbein is the Owner, Publisher and Editor of the Crossing Wall Street Investment Newsletter, an investment analysis and research blog on the global stock market expressing opinions on individual securities and publishing the crossing Wall Street buy list since 2006.

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Unlike other ETFs that have a static management fee, CWS will have a dynamic expense ratio, depending on the performance of the fund manager.

The new active ETF currently has a 0.75% expense ratio, but the fee can range from 0.65% to 0.85%, according to the prospectus. Specifically, the base fee is adjusted at a rate of 0.02% for every 0.25% to 0.50% of outperformance or underperformance, compared to the performance of the benchmark S&P 500 Index, but only up to 2.00% of the performance benchmark.