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Should You Like Actively Managed ETF?





The fundamentally based ETFs, which attempts to beat a market benchmark, defies all indexing purposes of ETFs. For actively managed funds, I would rather stick to traditional mutual funds with a longer track record.

From MarketWatch:

Is this any way to run an exchange-traded fund?

That's the question pitting backers of an emerging investment strategy known as "fundamental" indexing, which attempts to beat a market benchmark, against ETF traditionalists who follow established practice that ranks companies in an index according to their market value.

Fundamentally based ETFs expand beyond market value, giving credit to company-specific factors such as valuation, cash flow, dividends and insiders' trading activity.
The two sides in this heated debate are at an impasse, with fundamental indexing supporters claiming they're rewriting investing rules while critics counter that these funds' performance figures rely too heavily on historical data and have no proven track record.

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