What are 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).