Best Performing Actively Managed ETFs (investors business daily)

November 23, 2015

These 5 Best ETFs Are Leaving Indexes In The Dust

By APARNA NARAYANAN
INVESTOR'S BUSINESS DAILY

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Actively managed ETFs held a total $21.84 billion in assets through October, up nearly 30% from the end of 2014. While active exchange-traded funds are a speck in the roughly $2 trillion ETF landscape, they're growing fast.

The first active ETF debuted in 2008. More than half are less than 2 years old.

These ETF investment strategies often seek to outperform their benchmark indexes. Like most mutual funds, active ETFs have fund managers who decide which securities to include in the portfolio.

Active ETFs usually "don't take off like lightning" but are seeing steady and significant growth nonetheless, says Noah Hamman, CEO of AdvisorShares, an active ETF sponsor that recently published an industry landscape report.

"When performance is there, people are willing to use them in a portfolio," Hamman said.

Here are five winners in 2015:

• ARK Web x.0 (ARCA: ARKW) has gained 15% year to date through Friday vs. 7% for the tech fund category.

The ETF invests in innovative companies disrupting traditional business models. It focuses on businesses benefiting from the shift from hardware and software toward cloud computing, Big Data, wearable technology, social media and the Internet of Things.
ARKW holds 38 stocks. The top five include AthenaHealth (NASDAQ: ATHN), LinkedIn(NYSE: LNKD), Netflix (NASDAQ: NFLX), Amazon.com (NASDAQ: AMZN) and Red Hat(NYSE: RHT).

However, the ETF's 0.95% expense ratio is higher than most indexed peers, and assets and trading volume are relatively meager.

• SPDR MFS Systematic Growth Equity (ARCA: SYG) has risen 9.4% year to date vs. 6.1% for the large growth fund category.

The ETF screens for stocks based on fundamental and quantitative factors. Top holdings out of 50 include Amazon, Apple (NASDAQ: AAPL) and biotech giant Gilead Sciences(NASDAQ: GILD).

SYG's 0.6% expense ratio is three times that of its passive peer, iShares Russell 1000Growth (ARCA: IWF). SYG holds $9.4 million in assets.

• Columbia Large Cap Growth (ARCA: RPX) is another solid choice for successful investing with actively managed ETF strategies. Its 9.9% gain this year —and 22% average annual the past three years — have beaten the large-growth category.

• IShares Enhanced International Small-Cap (ARCA: IEIS) is outpacing its segment so far in 2015. IEIS is up 7.9% in 2015 vs. 3.1% for the foreign small/mid-value fund category.

• AdvisorShares WCM/BNY Focused Growth ADR (ARCA: AADR) is ahead too.

AADR is up 6.3% vs. 2.7% for the foreign large-growth category. It has also outperformed over three- and five-year periods of time.
The ETF owns 31 stocks, including top holding Taiwan Semiconductor (NYSE: TSM). The concentrated portfolio holds only the fund managers' best stock investing ideas, Hamman said. Their "stock selection really has added value," he added.

IEIS has a 0.49% expense ratio, with AADR at 1.27%.

• AdvisorShares Gartman Gold Euro (ARCA: GEUR) is up 1.9% year to date vs. a 21.3% loss for the precious metals commodity fund category and a 9.3% loss for SPDR Gold Shares (ARCA: GLD).

GEUR uses a somewhat complex investing method. It invests in gold using euros, going long on gold futures and short on euro futures. That strategy has worked in a rising dollar environment.

"Now investors can diversify themselves," Hamman said. "They don't have to have just GLD. They can pair this up and balance that exposure a bit."

GEUR has a 0.65% expense ratio vs. 0.40% for GLD.