Sorry money managers, but there’s another reason to hate ETFs (exchange-traded funds): they’re getting smart. Which isn’t to say that the ETFs you love and trade now are “dumb”—but they are passive.
Most ETFs are built to track an index, sector or region and their holdings are mostly the same from quarter to quarter.
Not so with the next generation of “smart” (or actively managed) ETFs. In these relatively new vehicles, the components are hand selected by an active manager who is committed to a strategy—not a sector.
A new one entered the fray this week: the first ‘short-only’ actively managed ETF, AdvisorShares’ Active Bear ETF.