Like the Mutual Fund? Meet the ETF

Some portfolio managers are bringing their star power to exchange-traded versions of their funds. Also, four “nontransparent” ETFs to keep your eye on.

money trees in pots getting watered by double-spouted watering can
(Image credit: Illustration by Richard Mia)

Exchange-traded funds are practically synonymous with index investing. But lately, actively managed ETFs have been flooding the market. Since the start of 2021, the "overwhelming" majority of new ETF launches have been actively managed, says Todd Rosenbluth, CFRA's head of ETF and mutual fund research. Many of these active ETFs follow the same strategies – some even share the same names – of well-known, top-rated actively managed mutual funds.

Some of these new ETF replicas could be worthy choices for your portfolio. But first, it's important to understand how they work (they vary a bit from how index-based ETFs operate), as well as how they may differ from their mutual fund counterparts.

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Nellie S. Huang
Senior Associate Editor, Kiplinger's Personal Finance

Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.