After growing acquainted with passive index-based exchange traded funds, many investors are now branching out into actively managed fixed-income and smart beta equity strategies.
“Active management has made a really big comeback when it comes to ETFs, especially within fixed-income. That’s where we’re seeing the strongest growth within actively managed ETFs,” Ryan Issakainen, SVP, Exchange-Traded Fund Strategist, First Trust, said at the Inside ETFs conference.
“When it comes to equities, we’ve had a lot of sort of a shift in popularity toward these factor-based ETFs, and I think that has a lot to do with the fact that investors are still looking for ways to outperform,” he added.
First Trust offers a suite of various ETF strategies that investors have picked up on. For example, the First Trust Low Duration Opportunities ETF (LMBS ) is First Trust’s most popular actively managed ETF play. The ETF tries to generate current income and capital appreciation through investment grade, mortgage-related debt securities, and other mortgage-related instruments tied to residential and commercial mortgages.
Additionally, the First Trust Value Line Dividend Index ETF (FVD ) is a popular smart beta or alternative index-based ETF where holdings are pulled from a universe of stocks that have rankings of 1 or 2 in the Value Line Safety Ranking System. From there, Value Line selects companies with a higher than average dividend yield, as compared to the indicated dividend yield of the Standard & Poor’s 500 Composite Stock Price Index.
Watch Ryan Issakainen Discuss Fixed-Income and Smart Beta Strategies:
This article originally appeared on ETFTrends.com.
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