Like the Mutual Fund? Meet the ETF
Exchange-traded funds are practically synonymous with index investing. But lately, actively managed ETFs have been flooding the market. Since the start of 2021, the "overwhelming" majority of new ETF launches have been actively managed, says Todd Rosenbluth, CFRA's head of ETF and mutual fund research. Many of these active ETFs follow the same strategies – some even share the same names – of well-known, top-rated actively managed mutual funds.
Some of these new ETF replicas could be worthy choices for your portfolio. But first, it's important to understand how they work (they vary a bit from how index-based ETFs operate), as well as how they may differ from their mutual fund counterparts.
Of course, active ETFs aren't totally new. The first one launched in 2008, according to Morningstar. Pimco Total Return Bond ETF, now called Pimco Active Bond (), arrived in early 2012. And Ark Investments opened the first of its seven actively managed ETFs in 2014, including one of our favorites, Ark Innovation (), a member of our list.
