Actively managed equity ETFs have continued to gain traction in 2024 and risen in value. Some of the top performing funds were focused on in vogue, large-cap growth stocks such as the American Century Focused Dynamic Growth ETF (FDG ) and the Fidelity Blue Chip Growth ETF (FBCG ).
However, I am also excited to see strong performances this year from other under-the-radar strategies that invest beyond U.S. communications services and information technology. Below we will take a closer look at a few of them that take a concentrated approach to investing.
The Energy Transformation
The TCW Transform Systems ETF (NETZ ) invests in companies management believes will drive and benefit from the energy transformation. The $185 million fund recently held 25 positions and was up 31% year-to-date as of October 22. NETZ’s top positions include Diamondback Energy, GE Aerospace, Republic Services and Trane Technologies.
Manager Eli Horton believes there are huge investments required in infrastructure, materials, and “brown-to-green companies over the next decade.
ETFs Looking Overseas for Growth
The Davis Select International ETF (DINT ) takes a broad approach to overseas investing focused on fast-growing, but undervalued companies. The 26 stock portfolio was up 29% thus far in 2024. Recently 30% of the fund’s assets were invested in China, but the fund also had meaningful exposure to Canada and developed European markets like Denmark and Switzerland. AIA Group, Danske Bank, Meituan, and Teck Resources were among the larger holdings. DINT recently had $205 million in assets.
Manager Danton Goei believes the gap between price and value is the widest he has ever seen. He thinks this sets the stage for attractive returns in the years ahead.
Inflation May Have Slowed But Not this ETF’s Performance
The Horizon Kinetics Inflation Beneficiaries ETF (INFL ) invests in companies that are expected to directly or indirectly benefit from rising prices of real assets. These are companies with scalable, economically resilient business models.Approximately 45 stocks are held in INFL including Intercontinental Exchange, Landbridge, Texas Pacific Land, Viper Energy, and Wheaton Precious Metals. The $1 billion INFL was also up 29% for the year.
Manager James Davolos favors companies with pricing power, operating leverage, and that are reinvesting in the business. INFL has performed well in 2024 despite inflation dissipating.
Heading into 2025, we think advisors and investors will further embrace actively managed ETFs. While some of the largest ETF providers are building out their ETF presence, we contend it is worth looking at the full field.
For more news, information, and analysis, visit VettaFi | ETFDB.
