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The Rise of Active ETFs in Today's Stock Picker's Market
Active ETFs: Combining the Best of Both Worlds
According to Avantis Investors Chief Investment Officer Eduardo Repetto, active ETFs can still effectively compete in today's stock picker's market. He believes that these funds offer the advantages of active management and stock picking, while also providing the tax and cost benefits typically associated with ETFs. This combination has led to a significant inflow of money into active ETFs. Repetto predicts that this trend will continue throughout the rest of the year.
The Evolution of ETFs
Repetto points out that the landscape of ETFs has undergone a significant transformation in recent years. Traditionally, ETFs were primarily focused on index tracking. However, there has been a steady increase in the number of actively managed ETFs available to investors. This shift reflects a growing demand for funds that actively manage portfolios of U.S. stocks.
The Avantis U.S. Equity ETF
Repetto's firm is behind the Avantis U.S. Equity ETF, an actively managed portfolio of U.S. stocks. The fund's top holdings include Apple, Microsoft, Amazon, Meta Platforms, and Alphabet. As of Friday, the ETF has performed well, with a 12% gain this year and an impressive 49% increase over the past three years.
The Future of Active ETFs
With the rise in popularity and success of active ETFs, it is clear that these funds have a promising future. Investors are increasingly attracted to the combination of active management with the benefits of ETFs. As the market continues to evolve, active ETFs are likely to play a significant role in meeting the demands and preferences of investors in the stock picker's market.
The Hot Take on Active ETFs and their Impact on New Businesses
Embracing the Active ETF Trend
The rise of active ETFs in today's stock picker's market presents an intriguing opportunity for new businesses. As Eduardo Repetto, Chief Investment Officer of Avantis Investors, suggests, active ETFs combine the best of both worlds by offering the advantages of active management and stock picking, along with the tax and cost benefits typically associated with ETFs. This unique combination has attracted a significant inflow of funds into active ETFs, and this trend is expected to continue throughout the year.
Paving the Way for New Investment Models
The evolution of ETFs, from primarily focusing on index tracking to an increase in actively managed options, reflects a growing demand for funds that actively manage portfolios of U.S. stocks. This shift in the investment landscape paves the way for new businesses to explore innovative investment models in the form of active ETFs. By utilizing active management strategies within an ETF structure, new businesses can potentially tap into a broader investor base that seeks the benefits of both active management and the flexibility and efficiency of ETFs.
The Success of Avantis U.S. Equity ETF
The performance of Avantis U.S. Equity ETF, managed by Avantis Investors, illustrates the potential opportunities for new businesses in the active ETF space. With top holdings in established companies such as Apple, Microsoft, Amazon, Meta Platforms, and Alphabet, this actively managed portfolio has achieved impressive gains over the past three years. This success serves as an example of how new businesses that embrace active ETFs could potentially attract investors and generate favorable returns.
Seizing the Future Opportunities
As the popularity and success of active ETFs continue to grow, new businesses should consider how these funds may impact their investment strategies and fundraising efforts. As investors increasingly seek the combination of active management and ETF benefits, new businesses that offer unique active ETF products tailored to specific market sectors or investment themes could position themselves for success. By aligning their offerings with the demands and preferences of investors in the stock picker's market, new businesses can seize the future opportunities presented by the rise of active ETFs.
Article First Published at: https://www.cnbc.com/2023/07/16/stock-pickers-market-wont-derail-excitement-for-etfs-investor-says.html