Displaying items by tag: active funds

Municipal bonds are drawing increased attention as investors seek stability amid equity market uncertainty, with recent volatility making tax-exempt yields more attractive on both an absolute and relative basis. Despite negative year-to-date returns across much of the muni market, relative valuations compared to taxable fixed income suggest excess return potential ahead. 

Longer duration exposure gives munis sensitivity to interest rate changes, and if the Federal Reserve moves toward cuts later this year, investors could benefit from both quality and yield opportunities. 

American Century offers strategies like TAXF and CATF that combine diversification, credit research, and active management, while also providing tax efficiency within an ETF wrapper. For California investors in particular, CATF can deliver taxable-equivalent yields above 8%, highlighting the value of tax-exempt strategies in high-bracket states. 

Finsum: Active management adds further advantages, including the ability to navigate sectors and credit qualities excluded from passive indexes.

Passive investment strategies such as ETFs and index-tracking mutual funds have grown rapidly over the past decade, offering low-cost and tax-efficient exposure to broad markets. However, these vehicles are not always as straightforward as they seem, with three common misperceptions shaping investor decisions according to JPMorgan. 

First, passive funds may not perfectly mirror their benchmark indices due to regulatory constraints and concentration limits, which can lead to performance differences, particularly in sectors dominated by a handful of large-cap stocks. Second, while often inexpensive, specialized passive funds can carry higher expense ratios than expected, in some cases rivaling or exceeding actively managed alternatives. 

Third, passive ETFs are not universally tax efficient, as separately managed accounts can provide greater flexibility through tax-loss harvesting and charitable gifting strategies. 

Finsum: Understanding the nuances of passive investing is critical for aligning portfolios with long-term wealth goals and ensuring fees, exposures, and tax strategies fit the investor’s broader financial plan.

As investors seek diversification beyond U.S. stocks, active emerging markets ETFs may offer an edge over broad international equity funds for the rest of 2025. These markets currently trade at lower valuations than developed international equities, creating potential for stronger gains under favorable conditions. 

Active managers can exploit this by using fundamental research to identify the most promising companies. Emerging markets also feature younger firms well-positioned to benefit from global growth trends, particularly in technology and e-commerce. 

The Avantis Emerging Markets Value ETF (AVES), for instance, charges 36 bps and targets profitable, value-oriented companies, helping it outperform category averages with a recent 13.5% three-month return. 

Finsum: Active emerging markets ETFs present a compelling option for globally minded investors.

Vanguard has broadened its fixed-income ETF lineup with the introduction of three new funds, each tailored to meet different investor needs. The Vanguard Government Securities Active ETF (VGVT) is an actively managed strategy focused on U.S. government and agency bonds across various maturities, offering tactical flexibility at a modest 0.10% expense ratio. 

For investors preferring a passive approach, the Vanguard Total Treasury ETF (VTG) delivers broad exposure to the U.S. Treasury market, tracking a major benchmark index with an ultra-low 0.03% fee. Meanwhile, the Vanguard Total Inflation-Protected Securities ETF (VTP) targets those seeking protection from rising prices through TIPS, and carries a 0.05% expense ratio. 

These launches build on Vanguard’s growing fixed income suite, following the recent debut of its Multi-Sector Income Bond ETF (VGMS). 

Finsum: As demand for diversified, cost-effective bond solutions climbs, Vanguard continues to position itself as a go-to provider for both active and index-based fixed income strategies.

Active ETFs have officially outnumbered their passive counterparts in the U.S. for the first time, with 2,069 listed funds as of mid-June. While passive ETFs still hold the lion’s share of assets under management, investor interest is clearly shifting—active strategies have attracted nearly 40% of total ETF inflows this year. 

Many investors are turning to active ETFs for more agile, hands-on approaches in navigating today’s unpredictable markets, particularly in fixed income and equity sectors. The SEC is also weighing changes that would allow mutual funds to launch ETF share classes, a move that could dramatically expand access to active strategies and boost tax efficiency. 

However, this flexibility may come at a cost for asset managers, as ETFs typically can't turn away new investors like closed mutual funds can, potentially limiting a manager's control over fund size and strategy execution. 

Finsum: With U.S. ETF assets reaching $11 trillion in May, these structural shifts could fuel continued growth and reshape the way investors access actively managed portfolios.