What is an active ETF?
Active ETFs are CIUs, i.e. funds or Sicav, that may be easily traded in real time like a share, with the aim of investing in a portfolio of securities directly selected by a manager (asset allocation) not limited on tracking the performance of a benchmark index.
Differently from indexed ETFs, the investment strategy of active ETFs is established by the manager according to a selection criteria stated in the issuer’s prospectus. The aim is to have a more flexible instrument able to perform better than a reference index.
Active ETFs features
Active ETFs can be:
- traded in real time during the entire day like passive ETFs;
- useful to diversify a portfolio since they can be used together with passive ETFs in order to create more complex and low-cost strategies (tactical asset allocation);
- react quickly to unexpected events by relying on the manager skills.