AMETFS | Dall*E
We’ve just upgraded our ETF Database to now also include Actively Managed ETFs (AMETFs) and we’ve had a bunch of people asking; huh? Aren’t ETFs always passive?
Well yes they were, until early 2023.
But first, let’s step back.
Passive ETFs started locally in November 2000 with the Satrix40* and have grown to almost 90 listings. The idea here remains simple, a passive ETF tracks an underlying index. So for example the Satrix40 simple tracks the Top40 index stocks for stock and weighting for weighting. In other words replicating the return of the index.
Onto AMETFs
Actively Managed ETFs kicked off in May 2023 with the INCOME AMETF from 10X Investments.
These AMETFs are the same structure as passive ETFs with the one key difference, they’re actively managed.
In other words much like a unit trust, the manager of the AMETF is deciding what to hold, buy and sell in order to produce the return.
The managers strategy may be a better return than the index (much like a unit trust) or it may be a theme that doesn’t have a corresponding underlying index. For example the ETFSA Balanced Foundation Prescient AMETF (ETFSAB) which launched last year simple didn’t have an index it could track, so then it is an AMETF.
What we’re seeing is lots of multi-asset AMETFs and others with a focus on tech, income and more adding great diversity to the ETF listing space. We also have a bunch of new issuers in the active ETF space with the likes of EasyAssetManagement, Coronation, ETFSA, etc.
AMETFs have the same market makers, trading fees and availability as the traditional passive ETF and we have some great variants on the JSE with almost 30 listed.
So what’s the benefits of AMETFs?
- A more diverse range of underlying strategies.
- Can be included in tax-free accounts.
- Bought and sold within your normal JSE account (tax-free or not).
- Potentially cheaper fee structure compared to a unit trust (Nerina Visser did a great break down here).
The Verdict?
I like this. I only buy and sell JSE listed products so this gives me options. They’re transparent and cheap and we have some great offerings in this space already. Head over to our ETF Database and select the Active ETF option to see what’s on offer.
ETF blog
At Just One Lap, we are big fans of passive investment using ETFs. In this weekly blog, we discuss ETFs on the local market and the factors you need to consider when choosing an ETF. If you have wondered how one ETF differs from another, this is where you can find out. We explain which index each ETF tracks, what type of portfolio could benefit from holding each ETF, and how the costs will affect your bottom line.
