Active vs. Passive: Different Types of ETFs

CEO of ARK Investment Mangement Catherine Wood and CFA of Bristol Gate Capital Partners Michael Capombassis share their insights on the various types of ETFs.

Even among actively managed ETFs there are some variations worth noting.

Wood explains how the first installments of ETFs were passive but today there are now gradations of passive.

“There’s an index at the core for more ETF managers and that is how they measure their success,” she says. ” Active to us is doing research on companies and letting the research do the screening in terms of stock selection.”

Transparent and Non-Transparent

Moreover, among active ETFs , there are transparent and non-transparent varieties.

According to Wood, within active ETFs strategies that are fully transparent, investors will know everyday how much they own of what stock. That update may be less frequent with non transparent ETFS.

Active vs. Passive

With active ETFs on the rise, do passive ETFs still have a role to play?

Michael Capombassis says passive strategies are excellent for certain types of investors.

“We believe our active strategies is a wonderful complement to some of the passive strategies you find in the market,” he says.