Will active ETFs threaten unit trusts?
Active ETFs can compete in many respects with unit trusts, writes Pedro van Gaalen
As the global exchange-traded fund (ETF) market has matured, products have evolved, with active ETFs emerging as a small but increasing segment. According to independent research group ETFGI, global demand for these investments is on the rise, with 2017 inflows into active ETFs and products listed globally increasing by 57.3% to reach $75.2bn in total assets under management at the end of December. While the SA financial services sector has been slow to track this global trend, the status quo is about to change. Geoff Cook, executive director and co-founder of ZAR X, states that one of the biggest misunderstandings among investors is that an ETF has to be an index tracker. "An ETF can consist of any portfolio of assets, which is why we are in the process of listing a dynamic ETF that has a managed portfolio behind it."
Cook explains that an active ETF is similar to a unit trust in terms of its structure and mandate. It is the process of investing that differs. "By effectively ...
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