Active vs. Passive ETFs
ETFs can be actively managed or seek to provide investment results that correspond closely to a benchmark index. Parabla engages in active management.
Passive / Index ETFs
Passive / Index ETFs track an underlying index, such as the S&P 500, Dow Jones Industrial Average, or MSCI Emerging Markets Index. A passive ETF aims to match the performance of a given benchmark index and is therefore "passively managed." Generally, fund managers only change the asset allocation when changes occur in the underlying index.
Active ETFs
Active ETF management is based on research and the portfolio manager’s discretion within the investment strategies of the ETF, similar to an active mutual fund. Since the portfolio manager is picking stocks based on research, actively managed funds are not attempting to track the performance of a given index.
Overall, passive ETFs are suitable for investors who want a simple way to gain exposure to a specific market or asset class. Active ETFs may be suitable for investors who want a more actively managed portfolio. It is important for investors to carefully consider their investment goals and risk tolerance when deciding which type of ETF is appropriate for their portfolio. For more general details on ETF’s visit https://www.sec.gov/investor/alerts/etfs.pdf