Building modern multi-asset class portfolios with active ETFs

Key Takeaways

• Active ETFs seek different sources of return than index ETFs, but offer the same vehicle benefits.
• A wide variety of strategies for outperformance fall within the active ETF category, including quantitative and hybrid strategies, not just those driven by fundamental security selection.
• This variety of approaches offers varying levels of benchmark relative risk; the type of strategy you select and how you allocate your portfolio's risk budget can impact your potential for excess return.
• Active strategies may also allow investors to achieve objectives other than outperformance, such as increased diversification, higher income, or reduced volatility and/or drawdowns.

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