Any exchange-traded fund that seeks to provide high dividend yields by investing in a basket of high-dividend paying common stocks, preferred stocks or REITs. There are dividend ETFs that contain only
Although dividend ETFs are passively managed around an index, that index may be the result of certain quantitative screens such as companies with a history of increasing their dividends, or larger blue-chip companies with a higher level of perceived safety. The expense ratios of dividend ETFs should be comparable to, or lower than, the cheapest no-load mutual funds with similar investment objectives. As with all ETFs, dividend ETFs can be traded intraday. These types of funds may be part of the core portfolio of an income-seeking or generally risk-averse stock investor.
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Labels: Actively Managed ETF, Dividend ETF, Inverse ETF, Terms
What Does Actively Managed ETF Mean?
An exchange-traded fund that has a manager or team making decisions on the underlying portfolio allocation or otherwise not following a passive investment strategy. An actively managed ETF will have a benchmark index, but managers may change sector allocations, market-time trades or deviate from the index as they see fit. This produces investment returns that will not perfectly mirror the underlying index.
There’s no hard-and-fast rule as to whether an actively managed fund will under- or outperform a passive-ETF rival. Passive ETFs can at least be counted on to follow their indexes faithfully, which allows investors to know up front the holdings and risk profile of the fund. This helps to keep a diversified portfolio in line with expectations.
Actively managed funds, however, have the freedom to trade outside of their benchmark indexes, which makes it more difficult for investors to anticipate the future makeup of the portfolio.
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Labels: Actively Managed ETF, Terms
