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ETF Specialist

Active ETFs Wait for Their Heyday

They offer investors low costs and transparency, but they remain a tiny part of the ETF universe.

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A version of this article originally appeared in the October/November 2013 issue of Morningstar Advisor Magazine. To subscribe, please call 1-800-384-4000.

As a fan of the Chicago Cubs, I am all too familiar with the spring mantra: "This is our year." So, as someone who is also charged with analyzing the exchange-traded funds industry, I wince when I hear talk of the "year of the active ETF." Each of at least the past three years has been heralded as such by the financial media and industry watchers (including Morningstar). But there is no doubt that the active-ETF space has been long smoke and short fire with a few notable exceptions. I've examined the current crop of actively managed ETFs and highlight the characteristics that are hallmarks of a fund worthy of your investment.

Ben Johnson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.