Actively managed ETFs are gaining in popularity as of late with
several new product launches in the category. The recent entry of
more AdvisorShares funds, the entrant of State Street into the mix,
and yet another PIMCO launch have underscored the growth potential
of these ETFs (Read: PIMCO Files For Three More Active Bond
ETFs).
Although actively managed ETFs account for about just a tiny
fraction of the $1 trillion plus U.S. ETF market, a big chunk of
these are allocated to the fixed-income and currency groups (Read:
Ten Biggest U.S. Equity Market ETFs). This corner of the ETF market
is in the initial stage of development and often overlooked by many
investors due to its less liquid nature and higher cost when
compared to passive funds.
Active funds are arguably expensive because of the research cost
associated with the manager’s due diligence beyond the expense
ratio. They also face more in expenses thanks to low trading
volumes which add to the bid ask spread.
Most fund managers often fail to match the return of the indexes
with that of funds and hence might underperform their passive
counterparts. The other drawback of active funds is that they
require daily portfolio disclosures, which could hinder the
competitive portfolio composition (See more ETFs in the Zacks ETF
Center).
While this is true in most cases, a few active funds have
managed to hold up quite nicely. There have been a couple of
winners so far this year, leading to outperformance when compared
to a well-known benchmark (Read: Three Outperforming Active
ETFs).
Although part of the interest has undoubtedly been due to a
variety of new strategies that have been introduced in the space,
investors continue to choose well-known products targeting popular
market segments. These funds might be an intriguing option for some
investors looking for lower expense ratio, low risk, higher
returns, tax efficiency and transparency.
Below, we take a closer look at some little-known
actively-managed ETFs that have beaten out their index-tracking
counterparts in terms of year-to-date returns even when adjusting
for expenses:
Russell Equity ETF
(ONEF)
Investors looking for long-term capital appreciation along with
the global exposure amid uncertain economic conditions might
consider ONEF in their portfolio. The product has gained more than
3% so far this year and yielded a descent dividend of 2.45% per
annum. (Read: Five Great Global ETFs For Complete Equity
Exposure)
Since it is a fund-of-funds, the product provides excellent
exposure to all asset classes across developed and emerging equity
markets. It employs an asset allocation strategy, holding 10
securities in total. Launched in May 2010, the fund has so far
managed assets of about $4 million. Large cap firms account for
about 72% while mid and small cap take the remaining portion in the
basket.
The product is heavily concentrated on one fund — iShares
Russell 1000 Index Fund (IWB) —which make up for 47% share. IWB
seeks to deliver the returns of the large cap U.S. stocks and has
returned about 6% year-to-date, thereby making ONEF an attractive
play.
The other fund Vanguard MSCI EAFE ETF (VEA) that provides
exposure to the large cap stocks in Europe and the Pacific region,
the United Kingdom and Japan in particular, constitutes the second
position in the basket (Read: Play Europe with This ETF Pair
Trade). This fund has also performed well in the market but the
recent deepening of the Euro zone crisis has led to a slight
underperformance year-to-date, with negative returns of
0.5%.
ONEF provides broad exposure in the U.S. (62%) followed by
Japan, UK, Australia, France, Germany, Switzerland, Canada, Hong
Kong and China. The fund is trades in paltry volumes say about
2,000 shares per day on average basis. This nature of the fund
compels investors to pay more than the expense ratio of 0.51%.
Nevertheless, the product recoups this cost by providing healthy
returns.
PowerShares Active Mega Cap ETF
(PMA)
The inclusion of mega-cap securities in the fund’s asset has led
it to outperform the broad market so far this year. The product has
returned more than 4% year-to-date with a good dividend yield of
1.63%. This robust return will more than offset the fund’s
relatively high expense ratio of 75 basis points.
Stocks in the fund are the securities of the Russell Top 200
Index and the other mega-cap stock that meet certain liquidity
requirements as per Invesco Institutional's proprietary stock
model. This model is based on four pillars — earnings momentum,
price trend, management action and relative value — to select
securities in the basket (Read: Try Value Investing With These
Large Cap
ETFs).
This technique results in a portfolio of about 50 securities
with heavy weightings towards information technology and health
care (Read: Why SSDD Is The Top Tech ETF). In terms of top
individual holdings, three technology companies — Apple Inc.
(AAPL), Microsoft Corporation (MSFT) and Cisco Systems Inc. (CSCO)
— take the top three spots in the basket and the remaining top ten
consists of energy and healthcare
firms.
Trading in small volumes, the product was launched in April 2008
and has total assets of $5.5 million under management (Read: Guide
to the 25 Most Liquid ETFs).
AdvisorShares TrimTabs Float Shrink ETF
(TTFS)
This fund has shown outstanding performance so far in 2012, as
it generally invests in stocks that are liquid and have superior
long-term performances on historical basis. The ETF has gained
about 6% year-to-date, which is more than enough to offset the
annual fee of 99 bps charged by fund manager on a yearly basis
(Read: Guide to the 25 Cheapest ETFs).
This is a relatively new fund, initiated in October 2011, with a
novel concept. The main aim of the fund is to deliver the long-term
returns in excess of the total return of the Russell 3000 Index,
with less volatility than the Index. The stocks in the fund are
selected on extensive historical research from TrimTabs, which
focuses on stock prices rather than value.
According to TrimTabs methodology, the stock is expected to
perform best when the number of outstanding shares decline over the
last 120 days. This is true especially when the same amount of
money chases a smaller number of shares, thereby leading to a rise
in share price.
This unique technique creates the portfolio of 101 stocks after
screening through various aspects — float shrink, free cash flow
growth, and equity ratios — from the largest 3,000 U.S. based
companies.
With AUM of $8 million, the fund is well diversified across
individual securities, each having around 1% share in top 10
companies. News Corp. (NWSA), United Therapeutics Corporation
(UTHR) and GT Advanced Technologies Inc. (GTAT) represent the key
elements in the fund’s basket. The product is more inclined toward
mid cap stocks, accounting for 44% of the share while large and
small caps make for 19% and 37% share, respectively.
From the sector look, TTFs is tilted towards the consumer
discretionary and information technology sectors (Read: Play A
Consumer Recovery With These Discretionary ETFs). The product often
trades in very small volumes, about 1,700 shares per day, and
yields a paltry dividend of 0.04% per annum.
Active ETFs At A Glance
We believe these three ETFs could be solid picks for some
investors seeking surety of income in a sluggish economic scenario.
Despite the lesser number of trades, these have provided robust
returns due to the unique features embedded in the funds and could
be worth a closer look by investors seeking more active management
strategies in their portfolios.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30
Days. Click to get this free report >>
RUSSELL EQT ETF (ONEF): ETF Research Reports
PWRSH-AC MEG-CP (PMA): ETF Research Reports
TRIMTB-FLT SHRK (TTFS): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment Research
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days. Click
to get this free report
Powershares Active Mega Cap Fund (AMEX:PMA)
過去 株価チャート
から 6 2024 まで 7 2024
Powershares Active Mega Cap Fund (AMEX:PMA)
過去 株価チャート
から 7 2023 まで 7 2024