Definition of active ETF

An active ETF is simply an active management strategy in an ETF wrapper. They differ from traditional ETFs that are passive instruments in that they demand no investment strategy and simply require the ETF provider to track an underlying index. The best known active ETF is Pimco's BOND (BOND is the ETF's ticker) which is an ETF version of its Total Return Fund, which invests in highly liquid bond markets. Active ETFs remain a minuscule portion of the total ETF market.

 

active ETF in the news

Pimco's launch of an active ETF in March 2012 was seen as a game changer. An ETF must publish its holdings daily, and the launch of the ETF would give bond investors a window into the thinking of Bill Gross, seen as a guru in fixed income markets. 

In March 2013 it was reported that iShares, an ETF provider, had registered an intention to launch two active US equity ETFs. It had already registered other active ETFs but like some other fund providers had yet to go live with any products.  Industry observers said some fund companies could have been choosing to register products in order to have a seat at the table with the Securities and Exchange Commission in the future of active ETF regulation.

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