Active ETF flexibility offers investors some major advantages. That said, active funds often stick to certain style boxes. Investment style boxes, like value to growth, large or small caps, can offer simple heuristics to understand a strategy. At the same time, those style boxes come with strong arguments for or against, as with value.
See more: Is Adding Interest Rate Risk Worth It?
Those boxes, however, can constrain an active ETF’s inherent flexibility. Limiting one of active strategies’ strong advantages may not appeal to investors interested in their ability to adapt. Given that dynamic, investors may want to consider an active ETF that doesn’t limit itself to a specific style box.
The Natixis Vaughan Nelson Select ETF (VNSE) might fit the bill. The strategy, which charges 80 basis points (bps), hit its three-year ETF milestone last year. The fund concentrates on about 20 to 40 firms its managers believe are mispriced by markets.
That kind of broad remit could really help in a year like 2024. Markets entered the year expecting several rate cuts. Now, increasingly, it appears that interest rates may not even drop at all. An active strategy like VNSE that looks for mispriced firms without other strict requirements can make for an intriguing portfolio addition.
How, then, has the strategy performed over the last few years? The active ETF has returned 9.5% over the last three years and 14.8% over the last year, per Natixis data. It has done so on a net asset value basis. At the same time, it has done reasonably well YTD, too, returning 4% on a NAV basis, per Natixis.
Active investing has made major strides over the last year. With uncertainty being the name of the game, active strategies can add a lot to portfolios. VNSE, with its freedom from the style box, may be worth considering in the months ahead.
For more news, information, and analysis, visit the Portfolio Construction Channel.