Insider Monkey
10 Best Performing Actively Managed ETFs in 2023
Ramish Cheema
8 min read

In This Article:

In this piece, we will take a look at the ten best performing actively managed ETFs in 2023. If you want to skip our introduction to ETFs and the stock market in general, then take a look at the 5 Best Performing Actively Managed ETFs in 2023.

The stock market is full of all kinds of investment vehicles that can be used by professional and retail investors with different risk appetites. The most commonly discussed investment security is a stock, which is simply a representation of a company's equity and allows traders to make profits through share price appreciation or others to make money via other avenues such as dividends.

However, investing in stocks is not for everyone. While buying the shares of well established companies such as Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) is unlikely to lead to significant losses, when the investment horizon is broadened, then the process becomes more complex. Any coverage about stocks, such as this one, comes with a disclaimer that all investment decisions should be made after consulting a qualified professional and to good effect. Investing in stocks typically requires understanding the fundamental nature of a company's business as well as being cognizant of economic realities that can affect stock indexes as a whole.

To avoid the high research required for stock investments, one popular investment vehicle is an exchange traded fund (ETF). An ETF is a collection of stocks that is typically compiled by professional financial services providers such as BlackRock, Inc. (NYSE:BLK). These are generally based either on industry sectors such as healthcare, energy, or technology, or stock and firm characteristics such as value stocks or growth stocks.

Within the ETF, there are two broad categories. These are actively managed ETFs and passively managed ETFs. As you might have guessed, actively managed ETFs have a portfolio manager in charge of regularly updating the fund. ETFs typically track a benchmark index, such as the S&P 500, and in an actively managed ETF, the portfolio manager is not constrained by the rules of the underlying index. For instance, the S&P 500 requires that any constituent firm must be profitable, and a fund manager can simply choose to ignore this if they feel that the restrictions are too tight and ignore other great stocks that can offer investors a return.

ETFs are so popular that even one of the greatest investors of our time, Warren Buffett of Berkshire Hathaway, holds one in his investment portfolio. Insider Monkey scanned Berkshire's investments for the second quarter of 2023 and discovered that Mr. Buffett had invested $17.4 million in the SPDR S&P 500 ETF Trust (NYSE:SPY). The SPDR S&P 500 ETF Trust (NYSE:SPY) is one of the biggest ETFs in the world in terms of its net assets. Currently, these sit at $393 billion, and for those out of the loop, an ETFs net assets are the amount left over for investors after all its liabilities are subtracted from the assets. The ETF is part of the SPDR State Street Global Advisors fund family, and as the title suggests, it tracks the S&P 500 stock index managed by S&P Global Inc. (NYSE:SPGI). Since its inception in 1993, the ETF has gained 902% in share price appreciation, which is in line with the corresponding value of 910% for the benchmark index over the same time period. However, the ETF is passively managed, so there's little benefit in investing in it apart from the ability to receive dividends (which is undoubtedly why Mr. Buffet has invested millions of dollars in it).

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