They are researching the ETFs, experimenting with offerings that combine the features of index funds and quantitative funds and finding areas in client portfolios where the new strategies could work. RIAs expect some of the tax and trading fee advantages to carry over from index ETFs, but have preferred to stay out of the active ETF market until now in order to see it tested.
"I feel there's an absolute place for this," said Nicholas Rowe, president of Focus Capital. Rowe plans to use active ETFs in smaller client portfolios where he cannot dedicate the time to do his own active management, yet would like to offer something beyond an index offering. Lou Stanasolovich, president of Legend Financial Advisors, plans to try active ETFs in what he calls his ultra speculative portfolios--portfolios where he trades relatively frequently, often in asset classes such as commodities and currencies.
"We're starting to dip our toes into the actively managed [ETFs], but we're being conservative," said Stacy Francis, president of Francis Financial. She is preparing to invest client money in the offerings and recently taught a class on active ETFs for investors.
Still, advisors are not completely sold on the supposed cost benefits of active ETFs.