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June 20, 2013 at 02:27 PM
Noah Hamman isn’t about to weigh in on the always-controversial active versus passive debate.
The founder and CEO of Active ETF provider AdvisorShares Investments thinks it’s rather moot, and sets his sights on a bigger target.
“I’m not trying to convince anyone that an active ETF is better than a passive ETF,” he says, when asked to pretend the interviewer is legendary passive investment advocate John Bogle, the Vanguard founder. “I’m instead looking at the $13 trillion in mutual funds, 80% of which are actively managed, and telling them there is a better way.”
He notes that when passive ETFs were introduced, passive strategies could be gotten from many different sources. It was the transparency, liquidity and accessibility that gave them their unique value proposition.
“It’s the same now with active ETFs. You can get active management anywhere, but active ETFs are more liquid, transparent and have a lower cost than comparable products.”
And of course, there’s the product’s tax efficiency, especially when compared with its mutual fund counterpart.
“For these reasons, active ETFs are attracting more assets at this stage of their development than passive ETFs did at the same point in theirs,” he adds.
