If investors aren’t already allocating capital to actively managed funds, 2020 might be a good time to start. Among a list of actionable investment advice for 2020, Forbes contributor John S. Tobey suggested giving active management funds a good look for the new year.
“Start considering actively managed funds, the winners in classic bull markets, by…
- Remembering that traditional company analysis carried out by experienced professionals at an investment management firm can both identify superior stocks to own and weed out the ones to avoid
- Ignoring past performance comparisons (because they have been overly affected by generalized, random and Fed/political interference)
- Ignoring fund expenses (growth fund managers that charge 1% or more can produce superior returns that are multiples of those fees in a classic bull market)”
Getting Active in Fixed Income
The bond market is rife with opportunities, especially in the ETF world where fixed income funds are having another record year, but when volatility strikes, this is where active management can play a crucial role.
“The bond market is not a market to invest in a passive way,” said Jeffery Elswick, director of fixed income at Frost Investment Advisors. “There’s a lot of opportunities if you’re an active manager.”
If interest rates were to move higher in 2020, this is when Elswick sees active management as almost a necessity. With the flexibility to move in and out of debt issues quickly to adjust for changes in the market, active management has a leg up on passive.
“You’re going to have returns that are pretty ugly, and so active managers usually do better in that type of environment,” Elsick added.
A pair of active ETFs worth looking include the Virtus Seix Senior Loan ETF (NYSEArca: SEIX) and Principal Ultra-Short Active Income ETF (NYSEArca: USI).
Getting Active with Disruption
Disruption is one of the sectors that will see more activity in 2020 and one fund to consider is the ARK Innovation ETF (NYSEArca: ARKK). ARK an actively-managed fund that will invest in domestic and foreign equity securities of companies that are relevant to the fund’s investment theme of disruptive innovation.
Its investments in foreign equity securities will be in both developed and emerging markets. It may invest in foreign securities (including investments in American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs) and securities listed on local foreign exchanges.
Getting Active Overseas
One fund worth looking at is the Natixis Seeyond International Minimum Volatility ETF (MVIN). MVIN focuses on developed markets and seeks to generate long-term capital appreciation with less volatility than typically experienced by international equity markets—the minimum volatility approach helps diminish portfolio risk.
MVIN gives investors:
- Less volatile approach to diversify internationally
- Long-term capital appreciation seeking less volatile international stocks
- Actively managed ETF with the ability to adapt over time
For more relative market trends, visit ETFtrends.com.