What is an Active ETF?
An Active ETF is an open ended managed fund whose units trade on a stock exchange, such as the ASX, just like any other listed security such as a share in a publicly listed company. They are often referred to as ‘exchange quoted products’.
The same as a managed fund, an Active ETF has an investment team and a portfolio manager who actively selects the underlying stocks or shares that go into the Active ETF. They undertake deep research into those stocks to determine their position in the portfolio and take into account things like the state of the economy and other factors that could impact the overall performance of the fund.
Being an open ended fund, an Active ETF trades typically very close to its Net Asset Value and has strong liquidity supported by the fund or other authorised market participants . It also gives investors transparency through regular disclosure provided on the ASX and Magellan’s website with things such as the Net Asset Value per unit, an intraday indicative net asset value per unit which updates every 15 seconds, monthly fund fact sheets and disclosure of the full portfolio on a quarterly basis. Couple this with no paperwork and investors have a solution that makes investing in both local and global companies easy – all that is needed is online share trading account or an account with a stockbroker.
At Magellan, we have three Active ETFs: Firstly, the Magellan Global Equities Fund (MGE), which gives investors access to a portfolio of actively managed global stocks without currency hedging, we then have the same global portfolio available to investors, but with full currency hedging in place and this is the Magellan Global Equities Fund Currency Hedged (MHG) and finally, we have the Magellan Infrastructure Fund (MICH) which gives investors access to a portfolio of listed infrastructure stocks that is currency hedged.
To understand how an Active ETF works, it’s important to understand some terminology that is used in reference to listed and exchange quoted products. Please click on our other videos to learn more and ensure that you read the Product Disclosure Statement applicable to a fund before making a decision to invest.