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The top three actively managed ETFs

With the S&P 500 up only 2% and the Nasdaq flatlining so far this year, most exchange-traded funds have been treading water. That’s because many ETFs track broad indexes and mirror their performance.

Index ETFs have been great investments during the bull market, as they have generated excellent returns with mostly cheap expense ratios.

But with indexers struggling and expected to produce lower returns compared to the past two years, it may be a good time to turn to actively managed ETFs. These are ETFs that are actively managed by professional portfolio managers, who pick the stocks in the ETF as opposed to just tracking an index, like the S&P 500.

In what many have called a stock pickers market, some actively managed ETFs have posted solid returns that have beaten the indexes. Here are three top actively managed ETFs.

Cambria global value ETF

The Cambria Global Value ETF (CBOE:GVAL) has been one of the top performing actively managed ETFs, both this year and over the long term. The portfolio managers look for value stocks from around the world based on cyclically adjusted price-to-earnings ratios (CAPE). Then, from that universe, they look for the cheapest stocks based on traditional value metrics.

Year-to-date, the ETF has returned roughly 11.4%, easily beating the major benchmarks, as well as the Russell 1000 and S&P 500 value indexes. It has an expense ratio of 0.64%.

This ETF holds about 214 stocks. The three largest holdings are Moneta Bank based in Prague, the First American Treasury Obligations Fund (NASDAQ:FXFXX), a money market fund, and Komercni Banka, which also trades in Prague.

T. Rowe price international equity ETF

The T. Rowe Price International Equity ETF (NYSEARCA:TOUS) invests at least 65% in non-US stocks. The fund primarily invests in developed markets, with an awareness of the global economic backdrop and the outlook for certain industries, sectors, and individual countries. The portfolio managers, led by Jodi Love, focus on bottom-up stock selection.

This ETF has returned 9.8% YTD and about 10.5% over the past one year. The one-year return for this ETF is going to be lower, due to the fact that the indexes were up big in 2024. The more important number is the outperformance year-to-date.

This ETF holds about 182 stocks at present. The three largest holdings are ASML Holding (NASDAQ:ASML), a Netherlands-based semiconductor company, Rolls Royce, which trades in London, and AstraZeneca (NASDAQ:AZN). Also, it has an expense ratio of 0.50%.

ARK fintech innovation ETF

The ARK Fintech Innovation ETF (NYSEARCA:ARKF) is an ETF managed by famed investor Cathie Wood and her team at Ark Invest. This ETF invests in both domestic and foreign stocks that are engaged in fintech innovation. Fintech innovations are described as technologically enabled products or services that potentially change the way the financial sector works. That could include stocks of companies involved in digital wallets, intelligent devices, neural networks, next gen cloud, and cryptocurrencies, among others.

The ETF is up 6% YTD, which, while below the others, still beats the benchmarks. However, it is up 44% over the past 12 months and has a three-year annualized return of 13.3%. In addition, it has an expense ratio of 0.75%.

This ETF currently holds about 37 stocks, with Shopify (NYSE:SHOP), Coinbase Global (NASDAQ:COIN) and Robinhood (NASDAQ:HOOD) as the three largest holdings.

What separates these actively managed ETFs from passively managed funds that track an index is that the managers can alter the portfolio, based on changes in the market. In volatile and uncertain times, it may be beneficial to have professional stock pickers managing the portfolio.

Author

Jacob Wolinsky

Jacob Wolinsky is the founder of ValueWalk, a popular investment site. Prior to founding ValueWalk, Jacob worked as an equity analyst for value research firm and as a freelance writer. He lives in Passaic New Jersey with his wife and four children.

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