Index funds attract many due to their straightforward nature and low fees. While numerous active ETFs struggle to match their indices, not every actively managed fund falls into this category. Some active ETFs have notably outpaced the S&P 500 in recent years. Incorporating these options into your portfolio could enhance diversification and possibly boost returns.
ARK Autonomous Technology & Robotics ETF
The ARK Autonomous Technology & Robotics ETF (BATS:ARKQ) offers investors a look into emerging tech innovations. Self-driving vehicles are beginning to debut in urban areas, and robotics is inching closer to becoming common in everyday use. Although this fund comes with a relatively high expense ratio of 0.75%, its impressive 56% return in the last year makes it quite appealing.
With only 37 stocks, the top ten holdings represent over half of the portfolio. This concentration isn’t surprising given that Cathie Wood manages this fund with her investment team, prominently featuring Tesla (NASDAQ:TSLA) among her favorites. Most of her selections lean toward growth stocks, as over two-thirds of the portfolio is filled with those assets.
This fund stands to appreciate in value as the prevalence of self-driving cars and robotics increases. Such advancements could fundamentally alter societal interactions, leading to substantial revenue growth for the companies linked to the ETF.
Avantis US Large Cap Value ETF
The Avantis US Large Cap Value ETF (NYSEARCA:AVLV) seeks out large-cap stocks that are undervalued but yield strong returns. Impressively, despite its active management, its expense ratio is only 0.15%, which is better than many passive funds.
This ETF also includes some small-cap and growth options, but most of its holdings are large-cap and mid-cap value stocks. With over 200 holdings, currently, Micron (NASDAQ:MU) tops the list. Notably, 26% of its investments are concentrated in the top ten stocks.
Various sectors such as energy, finance, and technology play crucial roles. The energy sector is particularly dominant, with each sector contributing over 10% of total assets. Over the past five years, the fund has returned 63%, achieving a 9% gain just this year.
Theme American Reshoring ETF
The Theme American Reshoring ETF (NYSEARCA:RSHO) targets U.S. manufacturing and stands to benefit from AI infrastructure trends. It holds just under 30 stocks, and notably, all ten of its leading holdings have posted positive returns in the past year. Only one of these has lagged behind the S&P 500, while three have increased by more than 100% during the same timeframe.
Though the ETF has a 0.75% expense ratio, it has delivered a solid 20% return this year and an impressive 119% over less than three years, signaling its potential as a long-term asset. This fund leans heavily towards small-cap stocks, which could offer higher returns, albeit with added volatility, if AI infrastructure expands. As the S&P 500 and Nasdaq Composite largely emphasize big-name AI players, this ETF provides a chance to invest in smaller AI firms that might not have gained much attention yet.
