5 Benefits Of Active ETFs

Learn about the benefits of using an active ETF in your portfolio.

Matthews Asia has a rich history of offering active management expertise to investors, traditionally through mutual fund and separately managed account wrappers. Now, we are excited to offer several of our active strategies as exchange-traded funds (ETFs). Active ETFs provide investors the same active management expertise they are accustomed to, with additional benefits:

  • Increased Tax Efficiency: The creation/redemption mechanism at the heart of the ETF structure affords the vehicle the potential for better tax efficiency, as there are less capital gains distributions. Active ETFs can leverage this for markets that are in-kind, for daily inflows and outflows, and for portfolio rebalancing.
  • Transparency: ETFs publish their portfolio holdings that will comprise that day’s net asset value (NAV). Investors will always know “what they own” in the strategies they hold.
  • Intra-day Liquidity: ETFs trade on exchanges throughout the U.S. trading day. This allows investors to buy and sell funds at a time of their choosing versus just at the end of the day. Some investors may appreciate the ability to take advantage of intraday pricing and volatility that occurs throughout the trading day.
  • Isolated Trading Costs: Because ETFs trade on exchange and investors interact with an intermediary and not the fund directly, each investor’s buy or sell trading costs are represented in the bid/ask spread at which they execute. Primary market activity, or creations and redemptions, occur at NAV + trading costs. As such, current fund shareholders are not impacted by the trading activity of others.
  • Low Minimum Investment: There is no minimum to invest in ETFs. Investors may purchase as little as one share, accessing the full, diversified portfolio exposure. Some brokerage platforms offer the ability to buy fractional shares, check with your broker.