Actively Managed ETFs Are Finding More Demand Among Advisors
This article was originally published on ETFTrends.com.
While passive index-based exchange traded funds still dominant the landscape, a growing chorus of voices are looking for active strategies with a proven track record wrapped up in the nifty and efficient investment vehicle.
"We were among the first to offer time-tested, proven active management - so, no index - in a traditional ETF format," Dodd Kittsley, Director at Davis Advisors, said at the Charles Schwab IMPACT 2018 conference. "So it really combines the best of both worlds. It brings all the benefits investors are comfortable with ETFs - transparency, tradeability, low cost, tax efficiency - but brings this investment discipline that Davis' been managing equities specialists for 50 years."
Investors may look to a time-tested active approach to potentially enhance returns. For example, the actively managed Davis Select U.S. Equity ETF (DUSA) , Davis Select Financial ETF (DFNL) , Davis Select International ETF (DINT) and Davis Select Worldwide ETF (DWLD) are backed by Davis Advisors’ focuses on long-term opportunities and incorporate the money manager’s judgement experience, high conviction, low turnover, accountability and alignment. The Davis team screens for fundamental characteristics, including cash flows assets and liabilities, and other criteria.
The management team looks to durability, adaptability and resiliency of a company for strong competitive advantages, superior business models, attractive financials and superior free cash flows. They also select those with proven, capable management with a track record of good decisions, intelligent capital allocators and alignment of interests. Additionally, the team focuses on discount to true value by calculating owner earnings to arrive at the true value of a company.
As ETFs gain in popularity, traditional actively managed shops are beginning to eye the ETF space to potentially expanded their businesses.
"It is about choice, indeed. That's the whole reason we got into the ETF business - advisors have asked for it, right. They knew our investment disciple, but they were transitioning their book of business to more fee based, more ETF based, and they wanted something that would give them the exposure to the value that active can have," Kittsley added.
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