The ETF universe is a mostly passively managed space where broad, vanilla, low-cost index ETFs rule. But actively managed funds are growing in number, and today represent about 10% of all U.S.-listed ETFs.
The bulk of the 217 active ETFs in the market competes in the fixed-income space, but active management is found in every asset class. Here’s a look at the biggest, most popular active ETFs in each pocket of the market.
US Fixed-Income ETFs
The majority of the active ETFs in the market are fixed-income strategies, and none is bigger—or even comes close, really—to the PIMCO Enhanced Short Maturity Active ETF (MINT). MINT is the largest active U.S. bond ETF. It’s also the largest active ETF in the market, period.
The fund has a massive $8.3 billion in assets under management (AUM), almost 2.5x the size of the second-largest active fund. MINT is the blockbuster of the active ETF space.
The portfolio is an ultra-short U.S. investment-grade bond portfolio many see as a money-market ETF proxy. MINT is cheap for an active strategy, at just 0.35% in expense ratio—$35 per $10,000 invested—and is highly liquid, trading with a negligible 0.01% average spread.
So far this year alone, MINT has attracted $256 million in fresh net assets, continuing its asset-gathering spree that saw more than $2.4 billion flow into the fund in 2017. Below is the fund’s 12-month performance:
Global Fixed-Income ETFs
The actively managed global fixed-income ETF universe has a new asset leader. The First Trust Preferred Securities & Income ETF (FPE) has surpassed the broad market strategy SPDR DoubleLine Total Return Tactical ETF (TOTL) in terms of assets to land the No. 1 spot in the segment.
FPE, which focuses on the global corporate bond space and invests primarily in preferred stocks, is now a $3.5 billion fund. It’s the largest active global fixed-income ETF, and the second-largest active ETF in any segment—second only to MINT.
So far this year, FPE has gathered more than $284 million in net creations, an asset haul that has come on the heels of $1.65 billion in net inflows in 2017.
FPE boasts great liquidity, trading with spreads averaging 0.05%, and costs 0.85% in expense ratio—not cheap, but within the normal range seen among active funds. The fund is up 7% over the last 12 months.
US Equity ETFs
The First Trust North American Energy Infrastructure Fund (EMLP) is the largest U.S. equity active ETF, with $2.2 billion in AUM. It invests in energy infrastructure master limited partnerships (MLPs).
The fund costs 0.95% in expense ratio, and trades with an average spread of 0.05%, putting its total cost of ownership at around $100 per $10,000 invested.
EMLP is not as much a pure-play infrastructure MLP approach as it is a diversified, complex basket that goes beyond MLPs in order to meet 1940 Act restrictions on the amount of MLP exposure an ETF can have. To that end, EMLP also invests in things like pipelines and utilities structured as C-corporations, as well as Canadian firms that used to be royalty trusts, according to FactSet data.
EMLP has attracted $90 million in net inflows so far in 2018, adding to the $772 million in net creations seen in 2017. The fund is down nearly 9% over the last year.
Global Equity ETFs
The ARK Innovation ETF (ARKK) is a quick-growing global equity ETF that targets companies sitting on the edge—or benefiting from—technological innovation.
So far in 2018, ARKK has already gathered a net of $302 million in net assets, gains that have come on the heels of $325 million in net creations in 2017. ARKK today is a $768 million fund, up a whopping 87% in the last 12 months, which certainly helps attract new assets.
Perhaps one of the key drivers of its success is the fact that ARKK is one of the only ETFs in the market to offer investors access to bitcoin through a trust. But the fund also owns a lot of hot names, like Tesla and Alibaba.
ARKK is also the second-largest active equity ETF on the market today, behind only EMLP. It costs 0.75% in expense ratio and trades with an average spread of 0.14%.
The PowerShares Optimum Yield Diversified Commodity Strategy No K-1 Portfolio (PDBC) leads the pack in the active commodity space, with $1.1 billion in total assets under management.
So far in 2018, PDBC has seen net creations of $377 million—an asset-gathering pace that’s already surpassed the fund’s haul for the entirety of 2017, when $270 million in net assets flowed into the fund.
PDBC offers access to a broad basket of commodity futures that’s very similar to its passive counterpart, the $2.7 billion PowerShares DB Commodity Index Tracking Fund (DBC). Active management here aims to mitigate contango and outperform DBC’s underlying index.
The ETF is very liquid, trading with an average spread of 0.06%. PDBC is also cheaper than index-based DBC, at 0.59% in expense ratio. The fund is up 10% for the year.
Asset Allocation ETFs
The iShares Commodities Select Strategy ETF (COMT) is the largest actively managed asset allocation ETFs, with $351 million in AUM. The fund really is a commodity strategy; however, it falls into asset allocation because of its unique approach that results in a multi-asset portfolio.
COMT owns commodities (via derivatives) and equities linked to commodities, natural resources and energy. It costs a competitive-for-the-space 0.48% in expense ratio, and offers the tax convenience of a 1099 instead of issuing a K-1. The ETF trades with an average spread of 0.16%. COMT is up more than 15% for the year.
The fund has gathered some $60 million in net inflows in less than three months this year, a notable feat for an ETF that attracted only $74 million in fresh net assets in all of 2017.
There are fewer than 20 actively managed alternatives ETFs on the market today, the biggest of which is the relatively young JPMorgan Diversified Alternatives ETF (JPHF). The fund, launched in September 2016, has $175 million in total assets.
So far in 2018, JPHF has attracted some $20 million in net inflows, following net creations of more than $106 million in 2017. JPHF isn’t cheap, at 0.85% in expense ratio, but it’s relatively competitive given the complexity of the fund, according to FactSet data. The ETF trades with an average spread of 0.22%.
JPHF is an alternatives ETF that allocates across various hedge-fund-style strategies including equity long/short, event-driven and global macro. JPHF can go anywhere, really, in a multi-asset basket designed for absolute return. The fund is down nearly 3% for the year.
Another scarcely populated segment of the ETF market is the active currency space. Here, the WisdomTree Emerging Currency Strategy Fund (CEW) leads, with a modest $45 million in AUM.
The fund is an emerging market basket that equal-weights a basket of 15 currencies, tracking how these currencies do relative to the U.S. dollar.
CEW, launched in 2009, costs 0.55% in expense ratio and trades with an average 0.18% spread. The fund has actually been struggling to attract new assets. Instead, it has seen about $10 million in net redemptions this year, following $1 million in net outflows in 2017.
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Contact Cinthia Murphy at [email protected]