The PDF version of the May issue of ETFInvestor is now available for download.

If the link above doesn’t work, you can download this month's issue by copying this address into your browser: http://etf.morningstar.com/Newsletter.aspx?download=currentIssue

This month, we dig into active ETFs.

At first blush, investors might think that an actively managed exchange-traded fund is an oxymoron. They can be forgiven for this mistake. After all, for their first 15 years of existence, ETFs were the exclusive domain of indexers. Even today, active ETFs account for just 3.5% of the $6.6 trillion investors have allocated to ETFs.

Active ETFs are not a contradiction, but an innovation. ETFs are just a vessel, a wrapper in which asset managers package and distribute investment strategies to investors—active, passive, and everything in between. The ETF wrapper can deliver material benefits for investors partnering with active managers. But, as with everything, there are trade-offs. Not every strategy is a good fit for an ETF. Also, depending on the strategy, ETFs’ benefits might not always materialize. I explore the benefits and drawbacks of active ETFs in this month’s cover.

Here’s a rundown of what else you’ll find in this month’s issue:     

• This month’s adjustment to the Income portfolio adds a pair of top-rated actively-managed income-seeking funds to the mix.
• Spotlights on ARK Innovation ETF ARKK and PIMCO Enhanced Short Maturity Active ETF MINT.
• Ryan Jackson covers the pros and cons of investing in active stock ETFs, animating them by way of examining three Morningstar Medalists in this category and how they compare to their mutual fund predecessors.
• Active bond ETFs have opened up certain active bond strategies to more investors and tend to sport lower price tags than their mutual fund elders, but their track record has been mixed when it comes to tax-efficiency. Neal Kosciulek puts a trio of Morningstar Medalist active bond ETFs under the microscope to see how they stack up versus their mutual fund counterparts.

Ben