Well, first see ETF if you don't already know what it is.
An actively managed one seems contrary to what ETFs are all about, right? An ETF is more or less a fixed basket of stocks that just...sits there. But not when it's actively managed. In practice, active managers weight and re-weight exposures inside of an ETF when it is actively managed.
Like...let's say oil stocks have sucked like an ocean-bottom-sucking-thing for a decade (they have), but the managers feel the global economy waking up again, and want to take their exposure to oil stocks from, say, 7% to 11% in the portfolio. They'd then rebalance the weightings over a given period (usually a quarter or a month) and then re-weight the ETF so that it follows whatever their macro views are about the given sectors to which the ETFs are exposed.
And then they play golf.
Related or Semi-related Video
Finance: What are Active Investing and A...4 Views
Finance a la shmoop.. what are active investing and active management? Active
doing something, active as in trying to beat the market by trading stocks active [People riding a bike on stock market appears on board]
as in humans making decisions often with the help of computers trying to beat
their index or the overall market ie the S&P 500 that's what we mean by the
market active; investing.. active; management okay
passive just passive.. active is what hedge funds and mutual funds and any
kind of funds that have a strategy do they actively try to invest money such
that the performance of their portfolio does better than whatever index or
benchmark it's measured against and notice were not talking about after-tax [Man discussing active investments]
performance here because remember every time you trade in a taxable account
while the attacks men cometh but we won't go there right now..... Your benchmark
compare is versus the S&P 500 and you manage a broadly based mutual fund the
passive investing cousin in this investment is an index fund think ticker
SPY, that's the biggest S&P 500 index fund well index funds are not actively
managed they are passively managed they just sit there and get tweaked a little [Pile of money grows larger overnight]
bit each year or really each quarter to kind of mirror the S&P 500 or whatever
their index is supposed to mirror but they just kind of sit there there's no
human trying to beat the market they are the market index funds are the
market and yeah 99% of actively managed funds don't beat the market over any
extended period of year like five or ten years very few ever beat the market and
essentially none of them beat the market after taxes so then why would someone
invest in an actively managed mutual fund when they're paying taxes and
they're thinking about an index fund as a comparable well basically they're one [Mutual funds on a table and a lollipop appears]
of these so yeah don't be one of these guys
Up Next
What are ETFs? They are Exchange Traded Funds, and unlike index funds, they don't really change, or rebalance, based on the industries represented...
What are mutual funds? Mutual funds are an aggregation of stocks, professionally managed for a "small" fee. Investors wanting exposure to a given a...
What is the difference between mutual funds and index funds? Mutual funds are professionally managed. Those investors trade shares and realize taxa...
What are the different types of mutual funds? There are many different types of mutual funds, including bond funds, equity funds, money market fund...