Active ETFs are the latest attempt to differentiate, and they seem to be taking investors full circle. Fees, which average 0.31% for active ETFs and 0.07% for their passive counterparts, add to the performance drag. The former are liquid, tax-efficient—at least in many jurisdictions—and cheap, with active ETF fees still roughly half those on active mutual funds. It has become the world’s largest active ETF thanks to the recent craze for option-related strategies. Investors who feel tempted to venture out of passive ETFs should make sure they are following their own interests and not those of the investment industry.

Source: Wall Street Journal October 15, 2024 14:46 UTC