What is the difference between active mutual funds and active ETFs?

While both vehicles might take similar investing approaches, their barriers to entry are vastly different. Actively managed mutual funds usually require a minimum investment and sometimes that minimum investment hurdle may be too high for an investor. Active ETFs, on the other hand, do not have investment minimums.

Are active ETFs better than passive funds in 2024?

In 2024, total assets in US passive strategies surpassed those in active ones for the first time. This reflects a long-term trend. Passive funds have attracted more inflows than active funds for the past nine years, according to Morningstar fund flow data. But active ETFs have managed to claim a meaningful slice of the market.

What is the difference between active and passive ETFs?

Active ETFs utilize a portfolio manager's investment strategy to try outperform a benchmark. Passive ETFs tend to be lower-cost and more transparent than active ETFs, but do not provide any room for outperformance (alpha). Passive investing is an approach to investing that focuses on tracking and achieving the return of a specific index.