Actively Managed ETF
There’s no hard-and-fast rule as to whether an actively managed fund will under- or outperform a passive-ETF rival. Passive ETFs can at least be counted on to follow their indexes faithfully, which allows investors to know up front the holdings and risk profile of the fund. This helps to keep a diversified portfolio in line with expectations.
Actively managed funds, however, have the freedom to trade outside of their benchmark indexes, which makes it more difficult for investors to anticipate the future makeup of the portfolio.
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