What are we looking for?
Actively managed ETFs beating their peers this year.
The screen
When times are good, index or passive investing is a slam dunk. However, when times are bad, some investors may seek solace with active managers who might be able to exploit market opportunities brought forth by volatile conditions. Today, I use Morningstar Direct to look for actively managed exchange-traded funds that have succeeded in this regard on a year-to-date basis. To do this, I screened the universe of 1,300 ETFs from Canadian domiciled fund companies, then further screened on those where the manager has discretion on trades (active management), as opposed to those that openly follow a predefined index. A further screen was placed to find ETFs that outperformed their category peers on year-to-date basis, as defined by the Morningstar category average.
What we found
The ETFs that met the above requirements are listed in the accompanying table, alongside their management expense ratios, trailing performance and inception dates; they are sorted by year-to-date total returns. Also listed in the table is the Morningstar Rating for funds, informally known as the “star rating,” which is an objective look back of performance of each fund on an after-fee, risk-adjusted basis against category peers, using at least three years of performance history. Though not used in the screening process, the rating was included to highlight longer term risk-adjusted performance of each fund. Investors are urged to firstly consider the category to which each fund belongs, to ensure that potential purchases are fit for purpose in their overall portfolio asset allocation.
This article does not constitute financial advice. Investors are encouraged to conduct their own independent research before purchasing any of the investments listed here.
Ian Tam, CFA, is director of investment research for Morningstar Canada.
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