What are actively managed ETFs?

Actively managed ETFs involve a fund manager or management team that researches investment opportunities and actively selects the ETF's portfolio securities and allocation, according to the investment goals that they seek to reach. These ETFs can provide investors/traders with an investment that aims to deliver above-average returns.

What is a passive ETF?

For example, some passive ETFs track the S&P 500 index or the Nasdaq. This means investors gain exposure to the entire markets represented by these indexes. Therefore, the fund manager of a passive ETF isn't making allocation decisions or conducting trades beyond those that take place in the index itself.

Are ETFs passive or actively managed?

They can be passively managed or actively managed. Passively managed ETFs attempt to closely track a benchmark (such as a broad stock market index, like the S&P 500), whereas actively managed ETFs intend to outperform a benchmark. There are 2 types of actively managed ETFs—traditional actively managed ETFs and semi-transparent active equity ETFs.