5 Outperforming Active ETFs Of 2015

Though 2015 has been extremely downbeat for broader market indices – as evident from 1.9% and 3.2% losses recorded by the S&P 500-based ETF SPY and Dow Jones-based ETF DIA, respectively – there were pockets of strength too (read: Alternative ETFs to Beat Volatility Post Lift-Off).

While it becomes a little hard to scoop up profits from passively managed vanilla U.S. ETFs amid broader market troubles, a look at the YTD performance of the Active ETFs makes sense. Actively managed ETFs are on the rise these days as issuers are eagerly looking for ways to outperform the benchmark indices.
 
This corner of the ETF market still has a long way to go and is often overlooked by investors due to their illiquid nature and higher costs compared with passive funds. There are over 130 unleveraged active ETFs in the space with total AUM of nearly $22.17 billion.
 
Active funds are arguably expensive because of the research cost associated with the manager’s due diligence which increases the expense ratio. These also face more in expenses thanks to low trading volumes which add to the bid/ask spread. All these higher costs actually spoil the competitive positioning of the active ETFs in many cases.

Still, several actively-managed ETFs have breezed past the broader market indices this year. Below, we take a closer look at five actively managed ETFs that have beaten out the broader market.
 
ARK Web x.0 ETF (ARKW) 
 
This actively managed fund holds about 50 stocks in its basket. The ETF has AUM of $14.1 million. No stock accounts for more than 5.7% of the basket. Athenahealth 2U Inc. and Netflix are the fund’s top three holdings.The product charges 95 bps in annual fees and is up 13.9% so far this year (as of December 21, 2015).
 
SPDR MFS Systematic Core Equity ETF (SYE)
 
This ETF also seeks capital appreciation by employing bottom-up stock selection and portfolio construction process based on fundamental and quantitative analysis. Holding 44 stocks in its basket, the product is widely diversified across various sectors with health care, financials and consumer discretionary occupying the top three positions. No stock accounts for more than 4.93% of the basket.

The ETF has low AUM of $2.9 million and trades in a meager average daily volume of under 1,000 shares. It charges 60 bps in annual fees and the fund has returned about 8.8% in the year-to-date time (as of December 21, 2015).