The Rise of Active ETFs: Can Fund Managers Outperform Passive Investing?
Yahoo Finance ·
Given the popularity of exchange-traded funds (ETFs), it's hard to believe that the very first one became available in the U.S. in 1993. That was the year the SPDR S&P 500 ETF debuted, offering a basket of securities and tracking the performance of the S&P 500 index. In the intervening 33 years, investors have found numerous reasons to give ETFs a key role in their diversified portfolios . Most ETFs are passively managed, a fact that has led to attractively low expense ratios. That's not to say that all ETFs are passively managed, though. In fact, active ETFs (professionally managed) account for roughly 80% of all new ETF launches in 2026. Given market volatility and the challenges of emerging markets, it's easy to understand why. However, the question is whether a managed fund is likely to outperform a passive fund over the long term. The core objectives of passive ETFs are different from those of actively managed ETFs. Here's how:
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