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Active ETFs

Active ETFs are managed funds that are traded on a stock exchange. They function like managed funds, but traded like shares which can be bought and sold during trading day on the stock exchange. Active ETFs are actively managed by fund managers to generate alpha and outperform relevant benchmarks.

Active ETFs will aim to beat the benchmark using a number of active investing strategies. They operate in a similar way to traditional managed funds but have the benefit of transparent, live intra-day pricing and market making ability which ensures liquidity.

Investors invest in the active ETF by using a stockbroker as if they were buying a share. Similarly, liquidating the investment follows a similar process to selling a share. This means that Active ETF investment can be monitored and reported like any of your other shares.

They are also sometimes known as listed managed funds, quoted funds, Exchange Quoted Managed Funds (EQMFs) or Exchange Traded Managed Funds (ETMFs). 

Passive and active investments are two different investment approaches. Put simply, passive investment involves tracking an index or benchmark (i.e. the ASX200) and replicating its returns and yield. These investments are generally simple and inexpensive –they sometimes get called “set and forget” strategies. If a fund manager has an active investment strategy, they use their skill and knowledge to ‘beat’ the market and earn excess returns for their clients. Although active investing may sound simple – its incredibly complex and hard to achieve, and can be relatively expensive. 

They provide access to a range of asset classes and investment strategies that non-institutional investors may not ordinarily have access to, for example international equities, fixed income securities and currency markets. By investing in an Active ETF/EQMF you can achieve a level of diversification that would normally be too difficult to realise investing in each asset individually. Active ETFs/EQMFs also have no minimum investment requirements which makes them more accessible. They benefit investors who prefer an active investing strategy and want their money to outperform the benchmark.  

 

Furthermore, Active ETFs/EQMFs are a way of investing in an actively managed fund without the hassle of the paperwork required by traditional unlisted managed funds. With no waiting times and the ability to choose which price you invest in the fund, Active ETFs/EQMFs make investing more accessible. Investing more money is as simple as purchasing new units. Investments in Active ETFs/EQMFs are more liquid than traditional managed funds making them a more flexible choice.

If you already have a stockbroking account, there is no extra paperwork or forms to fill out to invest in an Active ETF. This makes them more flexible and hassle free. Investing more into the Active ETF is similarly a simple process, simply purchase more units. 

Active ETFs are similar to the passively managed ETFs. Instead of using a passive investment strategy mimicking an index or other benchmark, Active ETFs have a fund manager who makes active decisions about what to invest in. Active ETFs aim to beat the benchmark or index whereas ETFs aim to follow the benchmark or index as closely as possible. Whilst Active ETFs will try to avoid falls in the benchmark, ETFs will go down when their benchmarks fall. As a result of an active investing strategy, Active ETFs will have higher fees to pay for the skill and experience of the fund manager.

Active ETFs and ETFs share similarities in that they are both listed on the exchange and investments in them are made through purchasing units via a broker.

You can invest in an Active ETF/EQMF the same way you invest in an ordinary share, through your preferred broker. Live, continuous pricing means that you can choose what price you invest in the Active ETF/EQMF. You will purchase units that will trade and settle like normal ASX shares, using CHESS. 

  • Active ETFs have continuous pricing, and are traded and settled like ordinary shares.
  • Active ETFs are an actively managed fund where the managers aim to outperform relevant benchmarks.
  • There is flexibility to be traded throughout the day.
  • It is a net asset value (NAV) based trading
  • Active ETFs are tax efficient, as the funds do not draw capital gains.
  • Buying or selling is efficient as it can be done via an exchange such as the ASX, the exact same way as buying a share.
  • It delivers easy accessibility to active investment management capabilities, and has the potential to outperform a benchmark.
  • Provides high transparency regarding pricing, with more frequency than traditional managed fund prices.
  • With live pricing, investors can choose what price they invest in the Active ETF
  • Tax reporting and portfolio administration is made easier, as Active ETFs can be managed and reported amongst other broker holdings.
  • Active ETFs have the ability to offer a diversified portfolio, which offers differentiation that is difficult for retail investors to access.
  • Active investing means that the Active ETF will actively seek to minimise losses during market downturns instead of passively following the benchmark
  • Active ETFs/EQMFs are actively managed so may charge higher fees than passively managed ETFs
  • Check the historical returns, whilst not an indicator of future performance, it can be useful to see how the fund has performed in the past
  • Check the benchmark the fund is using
  • There are brokerage costs involved with investing in Active ETFs/EQMFs

Prices for Active ETFs are live and market based. Some Active ETFs will take on the position of market maker to provide liquidity and a price that reflects the Net Asset Value (NAV).

Active ETFs are much more liquid than unlisted investment vehicles and other types of traditional closed-ended products. An open-ended structure means that the Active ETF can create and cancel units according to investor demand. Some Active ETFs will also take on the role of market maker to ensure liquidity for investors.

Risks of Active ETFS will vary, read the Product Disclosure Statement (PDS) for more information about specific risks affecting your Active ETF/EQMF of choice.

Active ETFs do not generally have minimum initial investments, making them more accessible for more Australians.

When you invest in an Active ETF you are investing in a portfolio of many different assets. The Active ETF is actively managed by a portfolio manager and investment team. You will receive distributions of the fund’s net income.

 

Active ETFs are actively managed by a portfolio manager and investment team to generate alpha and outperform a set benchmark. To invest in an Active ETF you will need to buy some units using your broker. You will also pay a management fee which is usually included in the unit price and in return for investing in the Active ETF you will receive distributions of the Active ETF's net income.

 

Investing in an Active ETF means that you will own units in the fund but not the underlying securities or derivatives themselves.

A traditional unlisted managed fund often has minimum investment requirements that an Active ETF does not have. Managed funds are not listed on the exchange, and thus require much more paperwork to invest in the fund. Active ETFs, on the other hand, can be traded easily through a broker. Active ETFs can be traded like ordinary shares unlike managed funds.

The increased paperwork associated with traditional unlisted managed funds means that you may have to wait before your money gets invested. Active ETFs make investing more accessible by allowing you to invest quickly and hassle free with the help of your broker. This also means that investments in Active ETFs are more liquid than traditional unlisted managed funds.

Active ETFs are different from LICs because LICs have a company like structure and are closed-ended whilst Active ETFs have a trust structure and are open-ended. This means that Active ETFs can create and cancel units based on capital inflows and investor demand.

Nothing, they are different names for the same investment vehicle. They are also sometimes known as Exchange Traded Managed Funds (ETMF), Exchange Quoted Managed Funds (EQMFs) or quoted managed funds. 

An Active ETF is a managed fund traded on a stock exchange. They function like managed funds, but traded like shares which can be bought and sold during trading day on the stock exchange. Active ETFs are actively managed by fund managers to generate alpha and outperform relevant benchmarks.

Active ETFs will aim to beat the benchmark using a number of active investing strategies. They operate in a similar way to traditional managed funds but have the benefit of transparent, live intra-day pricing and market making ability which ensures liquidity.

Investors invest in the Active ETF by using a stockbroker as if they were buying a share. Similarly, liquidating the investment follows a similar process to selling a share. This means that your Active ETF can be monitored and reported like any of your other shares.

Nothing, they are different names for the same investment vehicle. They are also sometimes known as Exchange Traded Managed Funds (ETMF), listed managed funds or Exchange Quoted Managed Funds (EQMFs). 

An Active ETF is a managed fund traded on a stock exchange. They function like managed funds, but traded like shares which can be bought and sold during trading day on the stock exchange. Active ETFs are actively managed by fund managers to generate alpha and outperform relevant benchmarks.

Active ETFs will aim to beat the benchmark using a number of active investing strategies. They operate in a similar way to traditional managed funds but have the benefit of transparent, live intra-day pricing and market making ability which ensures liquidity.

Investors invest in the Active ETF by using a stockbroker as if they were buying a share. Similarly, liquidating the investment follows a similar process to selling a share. This means that your Active ETF can be monitored and reported like any of your other shares.

Nothing, they are different names for the same investment vehicle. They are also sometimes known as listed managed funds, exchange quoted managed funds (EQMFs) or quoted managed funds. 

An Active ETF is a managed fund traded on a stock exchange. They function like managed funds, but traded like shares which can be bought and sold during trading day on the stock exchange. Active ETFs are actively managed by fund managers to generate alpha and outperform relevant benchmarks.

Active ETFs will aim to beat the benchmark using a number of active investing strategies. They operate in a similar way to traditional managed funds but have the benefit of transparent, live intra-day pricing and market making ability which ensures liquidity 

Investors invest in the Active ETF by using a stockbroker as if they were buying a share. Similarly, liquidating the investment follows a similar process to selling a share. This means that your Active ETF can be monitored and reported like any of your other shares.

Nothing, they are different names for the same investment vehicle. They are also sometimes known as Exchange Traded Managed Funds (ETMF), listed managed funds or quoted managed funds. 

An Active ETF is a managed fund traded on a stock exchange. They function like managed funds, but traded like shares which can be bought and sold during trading day on the stock exchange. Active ETFs are actively managed by fund managers to generate alpha and outperform relevant benchmarks.

Active ETFs will aim to beat the benchmark using a number of active investing strategies. They operate in a similar way to traditional managed funds but have the benefit of transparent, live intra-day pricing and market making ability which ensures liquidity.

Investors invest in the Active ETF by using a stockbroker as if they were buying a share. Similarly, liquidating the investment follows a similar process to selling a share. This means that your Active ETF can be monitored and reported like any of your other shares.

 

EQMF stands for Exchange Quoted Managed Fund. An EQMF is a managed fund traded on a stock exchange. They function like managed funds, but traded like shares which can be bought and sold during trading day on the stock exchange. EQMFs are actively managed by fund managers to generate alpha and outperform relevant benchmarks.  

EQMFs will aim to beat the benchmark using a number of active investing strategies. They operate in a similar way to traditional managed funds but have the benefit of transparent, live intra-day pricing and market making ability which ensures liquidity.

Investors invest in the EQMF by using a stockbroker as if they were buying a share. Similarly, liquidating the investment follows a similar process to selling a share. This means that your EQMF can be monitored and reported like any of your other shares.

They are also sometimes known as Exchange Traded Managed Funds (ETMF), listed managed funds, active ETFs or quoted managed funds. 

ETMF stands for Exchange Traded Managed Fund. An ETMF is a managed fund traded on a stock exchange. They function like managed funds, but traded like shares which can be bought and sold during trading day on the stock exchange. ETMFs are actively managed by fund managers to generate alpha and outperform relevant benchmarks.  

ETMFs will aim to beat the benchmark using a number of active investing strategies. They operate in a similar way to traditional managed funds but have the benefit of transparent, live intra-day pricing and market making ability which ensures liquidity.

Investors invest in the ETMF by using a stockbroker as if they were buying a share. Similarly, liquidating the investment follows a similar process to selling a share. This means that your ETMF can be monitored and reported like any of your other shares.

They are also sometimes known as listed managed funds, quoted managed funds, active ETFs or Exchange Quoted Managed Funds (EQMFs). 

A listed fund is a managed fund traded on a stock exchange. They function like managed funds, but traded like shares which can be bought and sold during trading day on the stock exchange. Listed funds are actively managed by fund managers to generate alpha and outperform relevant benchmarks.

Listed funds will aim to beat the benchmark using a number of active investing strategies. They operate in a similar way to traditional managed funds but have the benefit of transparent, live intra-day pricing and market making ability which ensures liquidity.

Investors invest in the listed fund by using a stockbroker as if they were buying a share. Similarly, liquidating the investment follows a similar process to selling a share. This means that your listed fund investment can be monitored and reported like any of your other shares.

They are also sometimes known as listed managed funds, quoted managed funds, active ETFs, Exchange Traded Managed Funds (ETMFs) or Exchange Quoted Managed Funds (EQMFs). 

Quoted funds are managed funds that are traded on a stock exchange. They function like managed funds, but traded like shares which can be bought and sold during trading day on the stock exchange. Quoted funds are actively managed by fund managers to generate alpha and outperform relevant benchmarks.

Quoted funds will aim to beat the benchmark using a number of active investing strategies. They operate in a similar way to traditional managed funds but have the benefit of transparent, live intra-day pricing and market making ability which ensures liquidity.

Investors invest in the quoted fund by using a stockbroker as if they were buying a share. Similarly, liquidating the investment follows a similar process to selling a share. This means that your quoted fund investment can be monitored and reported like any of your other shares.

They are also sometimes known as listed managed funds, active ETFs, Exchange Quoted Managed Funds (EQMFs) or Exchange Traded Managed Funds (ETMFs). 

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Related topics

When you invest in an ETF you are essentially investing in a portfolio of many different assets. ETFs are passively managed by a portfolio manager and investment team to follow a specified index. To invest in an ETF you will need to buy some units using your broker. You will also pay a management fee which is usually included in the unit price and in return for investing in the ETF you will receive distributions of the ETF’s net income.

 

The managing team of the ETF will invest in the securities for you, buying the underlying securities in different weights in order to accurately replicate the index or benchmark for a physical ETF or in derivatives e.g. swaps for a synthetic ETF. Investing in an ETF means that you will own units in the ETF but not the underlying securities or derivatives themselves.

 

Buying into an ETF means that you will receive exposure to a specific asset class. Keep in mind that if the index falls so will the ETF. The ETF price will fluctuate during the day, reflecting the market supply and demand.

They provide access to a range of asset classes and investment strategies that non-institutional investors may not ordinarily have access to, for example international equities, fixed income securities and currency markets. By investing in an ETF you can achieve a level of diversification that would normally be too difficult to realise investing in each asset individually. ETFs also have no minimum investment requirements which makes them more accessible.

ETFs usually have lower fees as passive investing strategies rely less on the skill and experience of the managers than active investing strategies. This makes them a cost effective way to diversify your portfolio and gain access to markets that traditionally tend to be more difficult to invest in.

 

A traditional managed fund often has minimum investment requirements that an ETF does not have. ETFs usually have lower fees as passive investing strategies rely less on the skill and experience of the managers than active investing strategies. This makes them a cost effective way to diversify your portfolio and gain access to markets that traditionally tend to be more difficult to invest in.

 

Because of their ability to be traded on the stock exchange, ETFs are much more flexible. Managed funds are not always listed but ETFs can be traded easily through a broker. However, this means that to invest more money into an ETF you must pay a brokerage fee every time, unlike a managed fund where additional investments can usually be made with no extra cost.

 

Managed funds tend to trade the securities they hold more often than ETFs do which means higher brokerage costs. This additional cost affects the performance of the fund and the income you receive from it.

EQMFs are similar to actively managed ETFs. Instead of using a passive investment strategy mimicking an index or other benchmark, EQMFs have a fund manager who makes active decisions about what to invest in. EQMFs aim to beat the benchmark or index whereas ETFs aim to follow the benchmark or index as closely as possible. Whilst EQMFs will try to avoid falls in the benchmark, ETFs will go down when their benchmarks fall. As a result of an active investing strategy, EQMFs will have higher fees to pay for the skill and experience of the fund manager. 

EQMFs and ETFs share similarities in that they are both listed on the exchange and investments in them are made through purchasing units via a broker.

You can invest in an ETF the same way you invest in an ordinary share, through your preferred broker. Live, continuous pricing means that you can choose what price you invest in the ETF.