The Rise of Active ETFs: 3 Experts Weigh In

ETF Trends interviewed three sources about active ETFs, why financial advisors are opting for these investment solutions for clients, and how these factors have changed in recent years. Each source responded to the same questions in their respective interviews.

The industry experts we spoke with were: Nick Reilly, founder and wealth advisor at One Day LLC; Paul Ma, lead portfolio strategist at Fidelity Institutional; and Myles Manning, asset management strategy consultant at Indefi, a strategy advisor for asset managers.

A Shift From Passive to Active ETFs

What are wealth advisors typically trying to achieve by using actively managed ETF strategies?

Nick Reilly

Nick Reilly: I think over the last 10 years there’s been a large focus on passive ETFs, for good reason. The markets had gone up and it was hard not to make money. In more volatile markets, and with the current economic and regulatory uncertainty, advisors have been able to have equal-weight or buffer strategies that reduce that risk, especially in bond and alternative strategies.

[The appeal of active ETFs is] largely from a risk management standpoint. We can’t be specialists in everything. The goal for me is to mitigate some of the downside risk, but still participate in some of the upside.