Quirky Working In These Active ETFs

July 10, 2017

[This article appears in our August 2017 issue of ETF Report.]

Sector investors are no strangers to active management. Indeed, the very act of slicing and dicing the market usually presupposes at least some specialized expertise. After all, you can't just take a chain saw to a broad-market index and expect to end up with an investable product.

Yet by our count, there are only 10 sector equity ETFs that classify as truly "active" (see Figure 1).

 

Figure 1. Top Active Sector ETFs

Source: ETF.com, as of 6/30/2017

 

Together, these funds have amassed $2.3 billion in assets under management (AUM)—a drop in the bucket compared with the $100 billion Select Sector SPDRs.

The story isn't the size of their assets, however, but the pace at which they're growing: $575 million has flowed into active sector ETFs since Jan. 1, or just under one quarter of combined AUM.

It's not hard to see why. With the exception of the real estate funds (and DFNL, which is only a few months old), all these active ETFs have outpaced their sector benchmarks, at least over the past year (see Figure 2).

 

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