Though there have been some bumps in the road, 2013 has been a year of smooth sailing for investors as bullish momentum continues to be a dominant force in the market. And as risk appetites continue to rise, more and more investors have poured into equities in hopes of capturing more promising returns. But for those willing to pay a slightly higher price, one corner of the equity ETF market has seemingly paid off – actively-managed ETFs [see 25 Wild ETF Charts From 1H 2013].
Though many argue the higher costs of active management are not worth it, some of these funds have been able to deliver stellar returns that certainly warrant investors to take a closer look. Below, we highlight three active ETFs that are beating the market so far in 2013 (data as of 7/26/13):
1. Trim Tabs Float Shirnk ETF (TTFS, B), Up 29%
This AdvisorShares‘ offering seeks to generate long-term returns in excess of the total return of the Russell 3000 Index, while at the same time minimizing volatility. TTFS’s investment thesis is based on the idea that stocks should perform best when their outstanding shares decrease over the past 120 days (float shrink); taking into consideration the basic laws of supply and demand, if the same amount of money is chasing a smaller number of shares, then the share price increases. And though the methodology is quite simple, a look at the fund’s performance indicates that perhaps simplicity does actually work.
2. Mardona Forward Domestic ETF (FWDD, C+), Up 26%
Another AdvisorShares’ fund, the Mardona Forward Domestic ETF is designed to provide long-term capital appreciation above the S&P 500 Index. Unlike traditional equity products that utilize market cap-weighting methodology, FWDD uses forward-looking financial data to determine allocations. The management expertise offered through this product has been worth the extra fees so far in 2013, although investors should note that the fund trades less than 2,000 a day and that shares are limited to less than 600,000 [see The Complete History of the SPY].
3. U.S. Equity Rotation Strategy ETF (HUSE, C+), Up 21%
Huntington‘s US Equities Rotation Strategy ETF employs a compelling sector rotation strategy that is applied to the S&P 1500 index. The managers have the flexibility to underweight or overweight certain sectors as deemed necessary; in certain environments, the difference between the best and worst performing sectors can be substantial. Currently the fund is titled toward the health care sector, which has delivered stellar returns so far this year. HUSE also features meaningful allocations to information technology and financials equities [see Actively-Managed ETF Portfolio].
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Disclosure: No positions at time of writing.
- Complete List Of Active ETFs
- Active ETFs: Biggest Winners & Losers YTD
- Head-To-Head: SSAM Vs. HUSE
- July 2012 ETF Roundup: Launches, Filings, And Closures
- Huntington Launches Sector Rotation ETF (HUSE)