Are ETFs actively managed?

Some are, but most (by popularity and broad usage) have historically been passively managed, meaning they track an index or rules-based strategy.

Actively managed ETFs exist and are exactly what they sound like: a manager or team chooses holdings (and changes them) to pursue the fund’s objective, rather than simply mirroring an index.

Why pick one over the other?

Passive/index ETFs: usually lower cost, predictable exposure (“I want the market”).

Active ETFs: potentially differentiated returns or risk management, but often higher fees and more “manager risk” (success depends on decisions).

One extra twist: “active ETF” doesn’t mean you, the investor, are actively trading. It means the fund manager is making active choices inside the ETF.

If you’re unsure whether an ETF is active or passive, the fund’s name and summary usually says “Active” or indicates an index it tracks, and the prospectus will spell it out.