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5 Outperforming Active ETFs of 2015

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Though 2015 has been extremely downbeat for broader market indices - as evident from 1.9% and 3.2% losses recorded by the S&P 500-based ETF SPY and Dow Jones-based ETF DIA , respectively - there were pockets of strength too (read: Alternative ETFs to Beat Volatility Post Lift-Off ).

While it becomes a little hard to scoop up profits from passively managed vanilla U.S. ETFs amid broader market troubles, a look at the YTD performance of the Active ETFs makes sense. Actively managed ETFs are on the rise these days as issuers are eagerly looking for ways to outperform the benchmark indices.

This corner of the ETF market still has a long way to go and is often overlooked by investors due to their illiquid nature and higher costs compared with passive funds. There are over 130 unleveraged active ETFs in the space with total AUM of nearly $22.17 billion.

Active funds are arguably expensive because of the research cost associated with the manager's due diligence which increases the expense ratio. These also face more in expenses thanks to low trading volumes which add to the bid/ask spread. All these higher costs actually spoil the competitive positioning of the active ETFs in many cases.

Still, several actively-managed ETFs have breezed past the broader market indices this year. Below, we take a closer look at five actively managed ETFs that have beaten out the broader market.

ARK Web x.0 ETF (ARKW)

This actively managed fund holds about 50 stocks in its basket. The ETF has AUM of $14.1 million. No stock accounts for more than 5.7% of the basket. Athenahealth 2U Inc. and Netflix are the fund's top three holdings. The product charges 95 bps in annual fees and is up 13.9% so far this year (as of December 21, 2015).

SPDR MFS Systematic Core Equity ETF (SYE)

This ETF also seeks capital appreciation by employing bottom-up stock selection and portfolio construction process based on fundamental and quantitative analysis. Holding 44 stocks in its basket, the product is widely diversified across various sectors with health care, financials and consumer discretionary occupying the top three positions. No stock accounts for more than 4.93% of the basket.

The ETF has low AUM of $2.9 million and trades in a meager average daily volume of under 1,000 shares. It charges 60 bps in annual fees and the fund has returned about 8.8% in the year-to-date time (as of December 21, 2015).

WisdomTree Bloomberg U.S. Dollar Bullish Fund (USDU)

The U.S. dollar has been on an uphill ride since the start of this year on the prospect of Fed policy normalization and many investors remain long-term bullish on the world's reserve currency due to a recovering American economy.

This product offers exposure to the U.S. dollar against a basket of 10 developed and emerging market currencies by tracking the Bloomberg Dollar Total Return Index. It allocates higher to the Euro zone currency at 32.44%, closely followed by Japanese Yen (18.95%) and Canadian dollar (10.98%). Other currencies like Mexican Peso, British Pound, Australian dollar, Swiss franc, South Korean Won, Chinese Yuan and Brazilian Real receive single-digit allocation in the fund's basket (read: Invest in America with These 4 ETFs ).

The ETF has amassed $260 million in its asset base and charges 50 bps in annual fees and expenses. Volume is good as it exchanges nearly 150,000 shares a day on average. The fund has added over 7.8% so far this year (as of December 21, 2015).

Columbia Large Cap Growth ETF (RPX)

This active ETF seeks long-term capital appreciation by investing in large-cap stocks that have above-average growth prospects. The manager combines fundamental and quantitative analysis including competitive advantage, quality of balance sheet and earnings, growth prospects, and potential for growth and stock price appreciation to select the stocks in the fund (see: all the Large Cap ETFs here ).

This approach results in a basket of 72 securities. From a sector look, the product has a slight tilt toward technology with 31% share, followed by consumer discretionary (22.1%), health care (20.1%) and consumer staples (10%).

RPX is often overlooked by investors in the large cap space as depicted by its AUM of $13.8 million and average daily volume of just 2,000 shares. The fund charges 83 bps in fees per year. It has gained about 7.7% the year-to-date time frame (as of December 21, 2015).

SPDR MFS Systematic Growth Equity ETF (SYG)

The fund looks to apply a bottom-up stock selection and portfolio construction process for long-term capital appreciation. The 50-stock ETF has amassed about $9 million in assets and trades at a paltry volume of 2,000 shares a day. The fund is heavy on consumer discretionary sector with over 26% weight followed by technology (19.01%), health care (18.03%) and consumer staples (16.4%). The fund charges 60 bps in fees and has advanced over 6.3% so far in 2015 (as of December 21, 2015) (read: Growth ETFs at the Heart of The Market Rally ).

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ARK- WEB XO ETF (ARKW): ETF Research Reports

SPDR-MFS SCE (SYE): ETF Research Reports

WISDMTR-BB USDB (USDU): ETF Research Reports

COLUMBIA LCG (RPX): ETF Research Reports

SPDR-MFS SGE (SYG): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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