Top Performing Exchange-Traded Funds Worth Investing In
In the world of exchange-traded funds (ETFs), active management is gaining traction, with a growing number of active ETFs entering the market. As of August 29, ETF Central screening tool shows that out of roughly 4,475 U.S.-listed ETFs, nearly half (2,156) are now classified as active.
This shift is driven by strong demand from advisors and institutions, ongoing conversions of mutual funds and separately managed accounts (SMAs) into ETFs, and the growing number of active ETFs with fee structures increasingly competitive with passive counterparts.
One such active ETF is the Capital Group Growth ETF (CGGR), which manages $15.2 billion in assets. With an expense ratio of 0.39%, the CGGR has delivered a 3-year annualized return of 25.62%. However, the 30-day SEC yield for this ETF is relatively low at 0.14%.
Another notable active ETF is the Capital Group Dividend Value ETF (CGDV), which manages $21.2 billion in assets. The CGDV boasts a lower expense ratio of 0.33% and a higher 30-day SEC yield of 1.44%. Over the past three years, the CGDV has yielded a 3-year annualized return of 23.68%.
However, the success of active ETFs is not without its challenges. Active ETFs may rely on proprietary strategies that aren't always easy to unpack. Moreover, picking active ETFs in advance is difficult due to the risk of hindsight bias and survivorship bias. Sticking with an active ETF long-term requires vigilance to watch for style drift.
In the realm of fixed income, active management has shown some short-term advantages, but consistent outperformance over longer periods remains elusive. On the other hand, over the past decade, 84.34% of large-cap mutual funds underperformed the S&P 500. Similar trends appear across most equity categories: mid- and small-cap funds, value and growth styles, and international equities. Long-term active underperformance remains the norm in international equities.
The growth and success of active ETFs are not limited to traditional players. For instance, the Avantis International Equity ETF (AVDE) has $8.7 billion in assets under management. Meanwhile, three actively managed ETFs with high risk-return ratios over the past three years include the ACATIS AI Global Equities, ACATIS AI US Equities, and ACATIS Qilin Marco Polo Asia Fund. Their recent performance in 2025 has been notably positive, especially the AI-driven and Asia-focused funds, suggesting potential for continued strong results this year.
In conclusion, while active ETFs offer the potential for higher returns, investors must approach them with caution. A good rule of thumb with active ETFs: you're buying the manager, not just the ticker. It's essential to understand the strategy, the manager's track record, and the potential risks involved before investing.
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