Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

Looking To Diversify Your Portfolio? Here Are 2 Actively Managed ETFs To Consider

By Tezcan Gecgil/Investing.com ETFsJul 25, 2022 10:30
ng.investing.com/analysis/looking-to-diversify-your-portfolio-heres-2-actively-managed-etfs-to-consider-121687
Looking To Diversify Your Portfolio? Here Are 2 Actively Managed ETFs To Consider
By Tezcan Gecgil/Investing.com   |  Jul 25, 2022 10:30
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
NDX
-1.85%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
US500
-1.14%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CVX
-2.18%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
GOOGL
-7.76%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
XOM
-0.71%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
PFE
+0.78%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
  • Since January, over 100 new actively managed funds have started trading
  • As markets slide, actively managed funds become more appealing
  • Note that actively managed funds tend to have higher fees

Investors continue to pour money into actively managed exchange-traded funds (ETFs). The active ETF market in the US grew across all asset classes through the first half, surpassing $300 billion in assets as of June 30. Meanwhile, the industry welcomed 110 new launches in the first half.

Actively managed funds typically have high expense ratios, so it is worth noting that actively managed “funds' performance needs to compensate for their operating costs.” Therefore, investors will need to do further due diligence to see if such funds meet their investment objectives.

With that said, here’re two actively managed funds that may appeal to a range of readers.

1. First Trust Nasdaq BuyWrite Income ETF

  • Current Price: $20.69
  • 52-week range: $19.46 - $22.98
  • Yield: 5.39%
  • Expense ratio: 0.85% per year

Investors seeking additional income in a volatile environment are turning to buy-write ETFs that buy a basket of stocks and then sell or write call options on those assets. Regular readers will know that this covered call setup is an options strategy that we regularly cover. Returns typically lag in bull markets but such funds can do better than benchmarks in neutral or bear markets.

The First Trust Nasdaq BuyWrite Income ETF (NASDAQ:FTQI) is an actively managed fund that targets to provide current income. It currently invests in 95 stocks from the NASDAQ Composite index and also writes (sells) calls on the NASDAQ 100 index.

FTQI Weekly
FTQI Weekly

This fund was first listed in January 2014 as the First Trust Hedged BuyWrite Income ETF. At time, it relied on both buying put options and writing call options on the S&P 500 index. However, following an amended investment strategy that consists of selling exchange-traded call options on the NASDAQ 100 Index, it started trading under a new name and ticker as of May 11, 2022.

FTQI is down around 4.3% year-to-date. At present, the yield from the premiums of calls sold stands at 5.39%.

By comparison, the NASDAQ Composite Index has lost over 24% so far in the year. Similarly, the Fidelity® NASDAQ Composite Index® ETF (NASDAQ:ONEQ) has declined about 24%.

Put another way, the covered call strategy has helped investors weather most of the storm in the shares held in the index. A fund like the FTQI can appeal to readers looking for relatively high levels of current income and a hedged exposure to stocks in the NASDAQ Composite.

2. Vanguard US Multifactor ETF

  • Current Price: $93.24
  • 52-week range: $87.34 - 110.32
  • Dividend yield: 1.69%
  • Expense ratio: 0.18% per year

The Vanguard US Multifactor Fund (NYSE:VFMF) invests in a wide range of US securities in different market sectors. A quantitative model is employed to create a basket of stocks across several factors, i..e., shares with low volatility, positive price momentum, robust fundamentals, and prices that offer value relative to their fundamentals.

VFMF Weekly
VFMF Weekly

VFMF was launched in February 2018 and tracks the Russell 3000 index as benchmark. The portfolio currently has 559 stocks where the top 10 comprise around 12% of the net assets of $135.2 million. Thus, no single stock is large enough to affect the ETF’s short-term returns.

Financials currently have the largest slice with 19.20%. Next come consumer discretional (15.80%), health care (14.80%), energy (13.40%), industrials (12.10%), consumer staples (8.50%) and others.

Among the leading names are the biopharma heavyweights Pfizer (NYSE:PFE), Bristol-Myers Squibb (NYSE:BMY), AbbVie (NYSE:ABBV) and Regeneron Pharmaceuticals (NASDAQ:REGN) and energy names Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX) as well as EOG Resources (NYSE:EOG). Alphabet (NASDAQ:GOOGL) is the only tech name among the top 10 stocks.

VFMF is down around 13.0% since January and 6.0% over the past 12 months. By comparison, the S&P 500 index and the Russell 3000 index, the benchmark for the ETF, have lost 16.9% and 17.9% respectively.

The fund’s trailing price-to-earnings (P/E) and price-to-book (P/B) ratios stand at 9.9x and 1.9x. Those metrics for the Russell 3000 are 17.6x and 3.2x. Readers looking for alternative vehicles to navigate choppy markets this earnings season could research VFMF further.

Disclaimer: On the date of publication, Tezcan Gecgil, Ph.D., did not have any positions in the securities mentioned in this article.

Looking To Diversify Your Portfolio? Here Are 2 Actively Managed ETFs To Consider
 

Related Articles

ETF Central
Growth Potential of China ETFs By ETF Central - Jan 31, 2023

China’s economy stalled last year amidst strict lockdowns related to Zero-Covid policies, in addition to an ailing property market. This weighed on Chinese stocks, with the...

Looking To Diversify Your Portfolio? Here Are 2 Actively Managed ETFs To Consider

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email