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5 Actively Managed ETFs That Are Worth the Fees


Actively managed ETFs are growing in number, and some offer unique concepts that merit consideration.

One of the primary reasons ETFs have become so attractive to investors and a real thorn in the side of mutual fund companies is cost. Simply put, passively managed ETFs usually feature much lower fees than comparable mutual funds.

That helps explain why actively managed ETFs are often overlooked in the exchange-traded products conversation. Not to mention, funds that are actively managed have a tendency to deliver performances that lag their benchmarks. This is especially true with mutual funds.

Still, actively managed ETFs are growing in number. There are about 40 listed in the US today and they have well over $4 billion in assets under management. And some offer unique concepts that merit consideration. So if your broker has been forgetting to tell you about actively managed ETFs, let's take care of that right now.

1. AdvisorShares Active Bear ETF (HDGE): The AdvisorShares Active Bear ETF isn't just one of the more successful actively managed ETFs, is one of the best in terms of ETFs that have made their debuts in 2011. HDGE debuted in late January and has accumulated more than $129 million in assets under management. We're just paraphrasing here, but essentially HDGE establishes short positions in stocks the fund managers believe have poor earnings quality or are vulnerable to negative earnings news. Two of HDGE's top three holdings are high fliers you're probably familiar with: OpenTable (OPEN) and (CRM).

2. AdvisorShares Dent Tactical ETF (DENT): The AdvisorShares Dent Tactical ETF was one of the first actively managed ETFs, making its debut more than two years ago. With an expense ratio of 1.65%, DENT is an ETF fund of funds, as five ETFs make up its top five holdings, accounting for over 80% of its weight. Those ETFs are the following: iShares Barclays TIPS Bond ETF (TIP), PowerShares QQQ (QQQ), iShares Dow Jones US Utilities Fund (IDU), PowerShares DB Dollar Bullish (UUP) and the ProShares Short S&P 500 (SH).

3. WisdomTree Asia Local Debt Fund (ALD): With an expense ratio of just 0.55%, it's hard to remember that ALD is an actively managed ETF, but it is. And it's also one of the best new ETFs of any genre to come to market in 2011 having accumulated $418.3 million in AUM. ALD offers exposure to debt denominated in the currencies of South Korea, Malaysia, Indonesia, Philippines, Thailand, India, China, Hong Kong, Singapore, Taiwan, Australia and New Zealand.

4. PIMCO Enhanced Short Maturity Strategy ETF (MINT): Back in March, PIMCO's MINT became the first actively managed ETF to top $1 billion in AUM. Now MINT has over $1.5 billion in AUM and a very nice 0.35% expense ratio. That's great in the actively managed ETF universe.

5. WisdomTree Emerging Markets Local Debt Fund (ELD): Also with an expense of 0.55%, ELD is ALD's broader cousin. It's a non-dollar denominated play on emerging markets debt issued in Brazil, Chile, Colombia, Mexico, Peru, Poland, Turkey, South Africa, Russia, Malaysia, Indonesia, Philippines, Thailand, China, and South Korea. Oh yeah, and ELD has been very successful, drawing in over $1.1 billion in AUM.

Bull Case: A flight to quality would certainly benefit MINT, and DENT and HDGE would be alluring plays if riskier assets are shunned once again.

Bear Case: Obviously, HDGE will suffer as stocks move higher, and a move away from Treasuries hurts MINT. ALD and ELD should hold up well regardless of environment.

Editor's Note: This content was originally published on by The ETF Professor.

Below, find some more great ETF and market content from Benzinga:

By Cory Mitchell
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No positions in stocks mentioned.

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