How should you choose between active ETF and passive ETF?

Before finding the answer, ask yourself a question – What do you want to achieve with ETFs? If you are looking to pursue a specific outcome, such as searching for income potential, looking for opportunities to outperform a passive index, or trying to manage risk, active ETFs may be the answer. Active ETFs combine the features of ETFs with active management. They bring expert research and security selection to ETF investors, identifying dislocations in the market and access the returns where available. With daily monitoring, portfolios can also be adjusted to react to market and outlook changes. If you simply want to gain exposure to a certain market, sector or the entire market to create building blocks, passive ETFs may be your choice. They replicate performance of indices at the lowest possible cost to investors. In reality, a mix of different types of ETFs can work together to help diversify portfolios and drive towards multiple investment goals.

Active ETFs combine the features of ETFs with active management. They bring expert research and security selection to ETF investors, identifying dislocations in the market and access the returns where available. With daily monitoring, portfolios can also be adjusted to react to market and outlook changes. If you are looking to pursue a specific outcome, such as searching for income potential, looking for opportunities to outperform a passive index, or trying to manage risk, active ETFs may be the answer.

Passive ETFs replicate performance of indices at the lowest possible cost to investors. If you simply want to gain exposure to a certain market, sector or the entire market to create building blocks, passive ETFs may be your choice.

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How should you choose between active and passive ETFs?

Published: 03/11/2024

With both active and passive exchange-traded funds (ETFs) out there in the market, which one should you choose? We share our view in this 1-minute video.

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How should you choose between active and passive ETFs?

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