Recent weeks have seen stock markets whipsaw in the face of geopolitical instability, rising energy costs, new COVID outbreaks in China, commodity price surges and regulatory moves against cryptocurrencies in Europe. Sectors such as energy, clean energy, cryptocurrencies, China, commodities, European stocks, shipping futures and the VIX have been all been flipping between being the best and worst-performing sectors of a given week over 2022. Against this background of volatility, some Active ETF managers have regained their mojo.
Do Active ETF Managers react fast to market changes?
According to stock market mythology, volatility gives active managers time to shine as they can (in theory) react faster and better exploit the short terms moves of markets than index funds. However, while research like the S&P SPIVA report suggests that Active managers typically struggle to beat markets consistently, this week’s news has worked in the favor of Active ETF issuers who feature heavily in the top-performing ETFs of the week.
The Valkyrie Balance Sheet Opportunities ETF (VBB), which invests in public companies with exposure to Bitcoin rose nearly 15% this week. The Simplify Volt Fintech Disruption ETF (VFIN) was up 14.5%, the SoFi Gig Economy ETF (GIGE) also rising 14.5% and, in some good news for beleaguered investors with Cathie Wood, the ARK Innovation ETF (ARKK) posted a 13% gain on the week. However, these short-term recoveries have done little to help the overall investor experience this year as these ETFs are down -19% (VBB), -27% (VFIN), -26% (GIGE) and -33% (ARKK) respectively, year-to-date.
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