The Cheapest Actively Managed ETFs

by on May 10, 2012 | ETFs Mentioned:

Institutional money managers, financial advisors, and investors of all walks have largely embraced the advantages offered by the exchange-traded product structure over traditional mutual funds. The rising popularity of indexing strategies makes it easy and affordable for investors to tap into virtually any asset class around the globe through the purchase of a single ticker. Thanks to the ongoing innovation in the ETF Universe, investors don’t have to settle for a passive strategy; in fact, increasing cost competition among issuers has led to lower prices for both passive and actively managed funds, allowing for investors to tap into a diverse suite of strategies without incurring astronomical expenses [see also Five Questions To Ask When Buying An ETF].

Cost efficiency is one of the founding pillars of the ETF industry, and as such, the exchange-traded product structure continues to evolve into a more affordable investment vehicle. Cost-conscious investors have several dozen “cheap” ETFs with rock bottom expense ratios to choose from, however, a growing number of actively managed funds are also making strides to compete on expenses. Investors who want to invest in an actively managed strategy without breaking the bank can now easily do so [see also How ETF Investors Can Save $415 Million].

Below we outline the cheapest actively-managed ETFs available on the market, highlighting 17 funds which charge less than 0.50% in annual expense fees:

  • Guggenheim Core Bond ETF (GIY): This ETF strives to outperform the popular Barclays Capital U.S. Aggregate Bond Index by utilizing a quantitative security selection process as well as a fundamental credit analysis of various fixed income sectors. GIY offers active exposure to the Total Bond Market for a reasonably priced 0.27% expense fee.
  • PowerShares Active Low Duration Fund (PLK): This fund offers exposure to Government Bonds while also utilizing a low duration strategy to minimize the impacts of a potential interest rate hike. PLK charges 0.30% in expenses and its portfolio is comprised of debt securities with a remaining maturity between zero and three years.
  • WisdomTree Euro Debt Fund (EU): This actively managed International Government Bonds ETF charges 0.35% in expense fees for offering exposure to an investment strategy that focuses on euro-denominated debt securities.
  • Columbia Municipal Bond Strategy Fund (GMMB): The management team behind this ETF considers local, national, and global economic conditions as well as a host of other relevant factors to determine the portfolio allocations. GMMB charges 0.35% in expenses for bringing active management to the National Munis space.
  • WisdomTree Dreyfus Japanese Yen Fund (JYF): This currency ETF charges 0.35% and seeks to earn current income reflective of money market rates available to foreign investors in Japan.
  • PIMCO Enhanced Short Maturity Strategy Fund (MINT): Similar to GSY, this ETF falls in the Money Market ETFdb Category as it looks to investors in ultra short-term debt securities; MINT offers a juicer dividend yield although it costs a bit more as well, charging 0.35% in expense fees.
  • PIMCO Intermediate Municipal Bond Strategy Fund (MUNI): This particular ETF targets municipal bonds that mostly mature between five and ten years from now, giving the fund both a moderate risk and current income profile. This ETF is slightly more expensive than competitor GMMB, although it has surprisingly managed to attract far more assets under management.
  • PIMCO Short Term Municipal Bond Strategy Fund (SMMU): This PIMCO offering charges the same 0.35% price tag as MUNI, except it focuses on short-term term debt securities, helping investors steer clear of some potential interest rate risk.
  • WisdomTree Australia & New Zealand Debt Fund (AUNZ): This ETF offers exposure to International Government Bonds by managing a portfolio of debt securities denominated in Australian and New Zealand Dollars. AUNZ charges a slightly steeper 0.45% expense fee than comparable WisdomTree offerings like JYF and EU.
  • PIMCO Build America Bond Strategy (BABZ): This fund offers active management in the Build America corner of the National Munis fixed income market for an annual expense fee of 0.45%.
  • WisdomTree Dreyfus Brazilian Real Fund (BZF): This is another actively-managed WisdomTree offering that allows investors to tap into overseas currency markets. BZF charges 0.45% in expenses as it seeks to achieve total returns reflective of both money market rates in Brazil available to foreign investors and changes in value of the Brazilian Real relative to the U.S. dollar.
  • WisdomTree Dreyfus Chinese Yuan Fund (CYB): Also charging 0.45% in annual expense fees, CYB looks to achieve total returns reflective of both money market rates in China available to foreign investors and changes in value of the Chinese Yuan relative to the U.S. dollar.
  • WisdomTree Dreyfus Indian Rupee Fund (ICN): This WisdomTree offering allows investors to tap into money market rates available in India for the same cost as BZF and CYB.
  • WisdomTree Dreyfus South African Rand Fund (SZR): This ETF invests in short-term, investment grade instruments that are reflective of money market rates available in South Africa. SZR also charges 0.45% in annual expense fees.

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Disclosure: No positions at time of writing.