As I suggested in a previous post, active mutual fund managers, in aggregate, do show some ability to outperform — gross of fees — and if these same managers moved to ETFs and lowered their fees, they would improve their outperformance odds. While active ETFs are relatively new and limited in size and scope, we can still draw from the experience thus far to get a sense of how managers have performed in the ETF structure.
From the already-limited universe of active options, I excluded funds launched within a year to get a somewhat fairer comparison. I then looked at each fund’s performance versus its stated prospectus benchmark and Morningstar-assigned category index (this is not the category average, but a standard index used to measure performance of funds in the category). That left us with a measly 142 ETFs.