By Herbert Blank<\/p>\n
Actively managed ETFs have evolved very differently from index-driven ETFs.\u00a0 Most of the assets have been accumulated in actively managed fixed income ETFs while the vast preponderance of Assets Under Management in Equity ETFs are index driven. Although there are many legacy reasons for this, the fact is that the efficiencies of the ETF structure, tax and operational, benefit fund shareholders of actively managed funds even more than the benefits long realized by those holding index-driven ETFs.\u00a0 I wrote in article in ETF.com (then the Journal of Indexes) in 2002 about these benefits. They still apply today.\u00a0 I am happy to send a copy to anyone who is interested.<\/span><\/p>\n 5000 stocks and 500 ETFs updated daily by ValuEngine.\u00a0 Free Access\u00a0\u00a0HERE<\/a><\/strong><\/p>\n Subscribers log in\u00a0HERE<\/a><\/strong><\/p>\n Perhaps the most overlooked benefit that pertains especially to active managers is that the structure insulates them from daily cash flows and cash drag.\u00a0 This fact means that all their trades can be based solely on investment decisions, not the need to liquidate a position. Often a manager forced to sell will choose a fresher idea with no capital gain over a stale idea with a significant embedded capital gain.\u00a0 This forced choice typically works against alpha.\u00a0 The need to keep cash available for redemptions can result in cash drag in an up market.\u00a0 Combined with all the well-known advantages, I believe an actively managed fund that switched to the ETF structure levels the playing field with passive benchmark ETFs.\u00a0<\/span><\/p>\n Today\u2019s analysis covers seven actively managed ETFs:\u00a0\u00a0<\/span><\/p>\n AIEQ<\/strong>, AI Powered Equity ETF by ETF Managers Group<\/span><\/p>\n ARKK<\/strong>, ARK Innovation ETF<\/span><\/p>\n ARKW<\/strong>, ARK Next Generation Internet ETF\u00a0<\/span><\/p>\n CWS<\/strong>, Advisor Shares Focused Equity ETF<\/span><\/p>\n DYNF<\/strong>, BlackRock U.S. Equity Factor Rotation ETF<\/span><\/p>\n FTHI<\/strong>, First Trust Buy\/Write Income ETF<\/span><\/p>\n HUSV<\/strong>, Horizons Low Volatility ETF<\/span><\/p>\n Research Reports on each of these ETF\u2019s are available here: <\/strong><\/p>\n http:\/\/www.valuengine.com\/rep\/mresearch_report<\/a><\/strong><\/p>\n AIEQ<\/strong> seeks long-term capital appreciation within risk constraints commensurate with <\/span>broad market US equity indices.\u00a0 The fund applies proprietary analytical algorithms to artificial intelligence (AI) technology, which can process over one million pieces of information per day, to build predictive financial models on approximately 6,000 U.S. companies. The technology continually analyzes data and models in its active stock selection process, and derives an optimal risk adjusted portfolio consisting of companies with high opportunities for capital appreciation. The fund is actively managed and discloses all portfolio holdings daily.<\/span><\/p>\n ARKK<\/strong> is an actively managed Exchange Traded Fund (ETF) that seeks long-term growth of capital. It seeks to achieve this investment objective by investing in domestic and foreign equity securities of companies that are relevant to ARKK\u2019s investment theme of disruptive innovation. ARK defines \u2018\u2018disruptive innovation\u2019\u2019 as the introduction of a technologically enabled new product or service that potentially changes the way the world works.<\/span><\/p>\n ARKW<\/strong> is an actively managed ETF that seeks long-term growth of capital by investing under normal circumstances primarily (at least 80% of its assets) in domestic and U.S. exchange traded foreign equity securities of companies that are relevant to the Fund\u2019s investment theme of next generation internet.\u00a0 The Adviser believes companies within this ETF are focused on shifting technology infrastructure to the cloud, enabling mobile, internet-based products and services, new payment methods, big data, artificial intelligence, the internet of things, and social media.<\/span><\/p>\n CWS<\/strong> invests in fundamentally sound companies that have shown consistency in their financial results and demonstrated high earnings quality.\u00a0 The investment strategy has been employed by the portfolio strategist, Eddy Elfenbein, since 2006 and is published annually as the Crossing Wall Street \u201cBuy List.\u201d As a focused portfolio, CWS will typically look very different than a traditional benchmark like the S&P 500. CWS can be used in a portfolio to add a fundamental alpha seeking manager in your domestic equity allocation.<\/span><\/p>\n DYNF<\/strong> seeks to outperform the investment results of the large- and mid-capitalization U.S. equity markets by providing diversified and tactical exposure to style factors via a factor rotation model.\u00a0 The fund selects stocks based on rewarded factors: quality; value; size; low volatility; and momentum. BlackRock\u2019s active management team dynamically emphasizes investment styles based on forward-looking insights.<\/span><\/p>\n FTHI<\/strong> has providing current income as its primary investment objective. Its secondary investment objective is to provide capital appreciation. FTHI uses a classic buy\/write strategy to pursue these objectives by investing in equity securities listed on U.S. exchanges of all market capitalizations and by utilizing an “option strategy” consisting of selling U.S. exchange-traded covered call options on the Standard & Poor’s 500 Index.<\/span><\/p>\n HUSV<\/strong> is an actively managed ETF seeking to The Fund’s investment objective is to provide capital appreciation with a secondary objective of controlling expected volatility.<\/span><\/p>\n Financial Advisory Services based on ValuEngine research available through:\u00a0<\/strong><\/p>\n www.ValuEngineCapital.com<\/a><\/strong><\/p>\n There are many more actively managed ETFs.\u00a0 All of these were selected because they have very distinctive strategies for selecting US stocks and 5-year actual histories.\u00a0 Let\u2019s compare how they have worked recently and historically using data from ValuEngine\u2019s ETF reports from January 29, 2021. SPY, the largest S&P 500 ETF and non-managed, is provided for benchmarking. The top performers in each category are highlighted by bold black Italics.\u00a0 The worst performers are highlighted in bold red italics.<\/span><\/p>\n <\/p>\n