Active ETFs have made significant progress in recent years. Combining the transparency of ETFs with the flexibility of active management, active funds have a lot to offer curious investors. Of course, not all active strategies are created equal. When it comes to investing in active equities, a fund like RFFC could set itself apart by adding REIT exposure.
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RFFC, the ALPS Active Equity Opportunity ETF, actively invests for a 48 basis point fee. The fund can invest in small-, mid-, and large-cap equities that meet its bottom-up approach. RFFC looks for dividend-paying stocks and securities with an improving return on capital.
RFFC's Active ETF Approach
Of course, not only does it look for common stocks, it looks at REITs. REITs offer exposure to real estate, a sector distinct from a lot of the standard equities. What’s more, REITs offer income, too, which can provide a healthy boost to an overall portfolio. While the active ETF can invest outside the U.S., 75% of its assets must be invested in the U.S.
That approach has helped RFFC return 24.7% over one year on an annualized NAV basis, per SS&C ALPS Advisors data. On a cumulative basis, the strategy has returned 22.8% in that time frame. When comparing those performance numbers to ETF Database information, RFFC stands out. The active ETF has outperformed both its ETF Database Category and FactSet Segment averages in that time.
What kind of outlook, then, can investors expect from the fund? REITs may benefit from the continued demand in real estate for space for data centers. The strategy’s active remit can empower it to benefit from rate cuts this month, as well. For those looking to get an active ETF into their portfolio, RFFC could be set to play a role.
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