Active Management Definition

Learn the definition of active management and other ETF terminology from the etf.com glossary.

ETF
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Reviewed by: etf.com Staff
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Edited by: etf.com Staff

Learn more about Active Management

An actively managed ETF is an exchange-traded fund that has a portfolio manager who makes decisions about which securities to buy and sell. This differs from passively managed ETFs, which simply track a particular benchmark index or asset. Actively managed ETFs can be more expensive than passively managed ETFs, but they also have the potential to outperform the market. Actively managed ETFs are a good option for investors who are looking for a more hands-off approach to investing. They can also be a good choice for investors who believe that a professional portfolio manager can beat the market. However, it is important to remember that past performance is not necessarily indicative of future results.

Related Terms

Passive Management, Nontransparent Active ETF, Alpha, Smart Beta ETF

ETF Glossary is etf.com’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock exchanges, and they can encompass a wide range of asset classes, including stocks, bonds, commodities and more. Given the diverse range of ETFs and the complexity of financial markets, having a clear understanding of ETF-related terminology is instrumental for investors looking to make informed decisions, manage risks effectively and navigate the evolving landscape of ETF investments.