Recently, actively managed ETFs have been facing steep competition from traditional passive funds employing “smart beta” methodologies. So far in 2015 however, several active ETFs have logged impressive returns, easily beating the broader market.
Please note that all data is as of market close on May 15, 2015.
The Top Actively Managed ETFs in 2015
|(IEIS )||Enhanced International Small-Cap ETF||14.42%|
|(FWDI )||Madrona Forward International ETF||14.17%|
|(IEIL )||Enhanced International Large-Cap ETF||12.98%|
|(CHNA )||China A-Share Portfolio||12.86%|
|(IVAL )||International Quantitative Value ETF||12.76%|
|(ARKW )||Web X.0 ETF||11.79%|
|(RWG )||Select Large Cap Growth ETF||9.10%|
1. Enhanced International Small-Cap ETF (IEIS)
This iShares ETF is designed to offer competitive long-term, risk-adjusted returns relative to broad international small-cap stocks. IEIS’ portfolio managers use a research-based investment process to combine quality, value, and size factors. The resulting portfolio consists of over 300 individual securities and is well-balanced with no stock accounting for more than 2.5% of total assets. In terms of market cap, IEIS primarily invests in small-cap companies, though mid- and micro-cap firms are given meaningful allocations.
In terms of geographic diversification, IEIS invests heavily in European and Japanese equities, the latter accounting for roughly one-third of the portfolio. The fund also has a nice mix of sector allocations, though consumer cyclical, technology, and industrials receive the highest weightings.
Since its inception in February of 2014 to the end of December of 2015, the fund has experienced significant losses, shedding over 12%. Since the beginning of 2015, however, IEIS has managed to gain back lost ground, but is still below it’s all time high of $25.84.
2. Madrona Forward International ETF (FWDI)
Making its debut in June of 2011, AdvisorShares’ FWDI is another ETF that puts a twist on the international equity market. This fund seeks to outperform the MSCI EAFE Index, utilizing a proprietary investment process and third-party analyst research to make allocation decisions. Like IEIS, this fund also primarily invests in European and Japanese equities, though meaningful exposure is allocated towards developed and emerging Asian equities, Latin America, and North America. In terms of market cap, FWDI is tilted toward large- and giant-cap firms, though mid- and small-caps are included in the portfolio.
Since its debut, FWDI has gained over 19%. The fund also took a steep hit at the end of 2014, but has since managed to climb higher this year.
3. Enhanced International Large-Cap ETF (IEIL)
Another iShares offering, IEIL is the large-cap counterpart to IEIS, employing the same active management strategy that combines quality, value, and size factors. The fund’s portfolio consists of roughly 177 holdings, the majority of which are large- and giant-cap companies, though mid-caps do account for a little over 20% of the portfolio. Again we see European and Japanese equities accounting for a significant portion of total assets. In terms of sector breakdown, IEIL is tilted towards financial services and industrials equities, though communication services, consumer defensive, basic materials, and energy sectors are also represented.
Over the trailing 1-year period, IEIL has only managed to log a gain of roughly 0.30% after experiencing steep declines in the last quarter of 2014. This year, however, the fund is up over 12%.
4. China A-Share Portfolio (CHNA)
This PowerShares fund offers investors exposure to the China A-Shares market. CHNA’s portfolio managers employ a quantitative, rules-based investment strategy that utilizes SGX FTSE China A50 Index futures contracts to obtain its objective.
Since the fund launched in October of 2013, it has gained over 66%. Over the trailing 1-year period alone, CHNA has risen an impressive 94%, and year-to-date is up over 10%. The fund is slightly below its 52-week high of $48.17, which was hit late last month. Despite its uptick, the fund has seen a significant decrease in assets so far this year with outflows of 13.45 million year-to-date.
Be sure to also read Investors Ditch SPY for VOO in Q1.
5. International Quantitative Value ETF (IVAL)
This ETF made its debut at the end of last year and is the second listing by Pennsylvania-based ValueShares. The fund employs a systematic process to identify stocks for investment, which includes identifying mid- to large-cap international stocks, which are then screened by forensic accounting, valuation, and quality metrics.
IVAL’s portfolio currently consists of just 50 individual securities. Despite its small size, the portfolio is relatively well-balanced with no stock accounting for more than 3.10% of total assets. In terms of market cap, IVAL is heavily tilted towards mid-cap companies, followed by meaningful allocations to giant- and large-caps. As seen with the other funds on this list, Japanese and European equities account for a significant portion of assets (Japanese equities themselves make up over half of the portfolio). Since inception, IVAL has gained roughly 13%.
6. Web X.0 ETF (ARKW)
Another relatively new fund, ARKW was one of the first funds launched by ARK Investment Management. The fund is focused on securities that are expected to benefit from shifting the bases of technology infrastructure from hardware and software to the cloud, enabling mobile and local services. The resulting portfolio consists of approximately 50 securities, the majority of which are U.S.-listed.
Some of ARKW’s top holdings include AthenaHealth, Salesforce.com, NetSuite, Amazon.com, and Twitter. In terms of market cap, the majority of the fund comprises mid- and large-cap companies, though giant- and small-caps receive meaningful allocations. Since inception in October of 2014, the fund has gained over 14%.
7. Select Large Cap Growth ETF (RWG)
This fund is the oldest actively managed ETF on the list, having made its debut in October of 2009. RWG offers investors exposure to large-cap equities that are believed to have above-average growth prospects. The fund’s portfolio is relatively small, with approximately 33 individual holdings, the majority of which are either technology, consumer cyclical, or health care equities.
Since inception, RWG has gained over 90%. The fund’s best annual return occurred in 2013, when RWG rose 44.66%. Just last week, the fund hit a fresh 52-week high at $50.04 and is up approximately 9% year-to-date.
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Disclosure: No positions at time of writing.