ETFs (exchange-traded funds) are a new generation of investment. ETFs invest in a portfolio of securities, such as stocks and bonds, providing diversification and professional management. Active ETFs, one of the newest innovations, give you a different bundle of investment benefits than a traditional mutual fund or traditional passive ETF.
ETFs bundle a group of securities to provide investment diversification like a mutual fund, but they package it with other features that investors want.
An ETF trades on the stock exchange, just like a stock. As stock prices change throughout the day, so does the price of the ETF. This gives investors greater flexibility about when to trade shares than with a mutual fund, which prices only once per day at the end of trading. It also gives you clear visibility of the price when you buy or sell. With a mutual fund, the price is unknown when you put in a buy or a sell order. You only learn the actual price after 4:00 p.m. of the day you make the trade.
Semi-transparent vs. fully transparent
Putnam offers two kinds of active ETFs: semi-transparent and fully transparent. Semi-transparent ETFs do not disclose their full portfolios of securities each day, while fully transparent ETFs disclose their full portfolio of securities each day. By disclosing less portfolio information to traders, the semi-transparent ETFs shield more of the research driving the ETF strategy.
All Putnam active ETFs are actively managed with a research-driven investment process and risk management framework. They seek to outperform benchmark indexes and can be used in a wide range of portfolios.
While mutual funds are alive and well, ETFs are like Gen Z — ready with the latest innovations. Get to know the advantages over traditional mutual funds.
Why consider Putnam active ETFs
No investment minimum
Frequently asked questions | Active ETFs
What are the benefits of an active strategy?
In recent years, ETFs took steps forward with active ETFs, which offer active stock selection by experienced portfolio managers in an ETF structure.
Active ETFs are different from traditional passive ETFs. Active ETFs try to outperform indexes rather than keep close to index performance, like a passive strategy. With experienced managers pursuing a strategy, they try to capture more of the upside in stock performance and less of the downside than a passive ETF. Portfolio managers research companies, industry sectors, and markets to choose stocks they believe can outperform indexes like the S&P 500 Index or the Russell 2000 Index.
Active ETFs offer diversification, intraday trading, cost and tax advantages, and active stock picking, including these benefits:
- Potential for outperformance: Active strategies pursue above-benchmark returns through investment research and portfolio positioning.
- Active risk management: Proactive research helps to identify better risk/reward potential and seeks to reduce unintended risk.
- Professional oversight: Experienced portfolio managers help active ETFs balance risk and return while delivering the ETF’s structural benefits.
How do you buy an ETF?
Putnam ETFs can be purchased and sold the same way you would buy or sell a stock — through most self-directed brokers or with the guidance of your advisor. Opening an online, self-directed brokerage account provides investors with:
- Accessibility to a variety of investment products
- Tools to help you build and optimize your portfolio
- Flexibility and freedom of managing your investment portfolio
See our step-by-step guide on how to buy an ETF.
What is ETF stock?
Believe it or not, asking to define ETF stock is a trick question: It doesn't exist. In spite of its popularity as a search term, there is no such thing as an ETF stock. The common use of the term is probably a case of people inventing shorthand to express what is similar in the two investments, even though there is no crossover.
Read our post “What is ETF stock?”