Passive vs. Active ETF

If you’re looking at ETFs,
you’ll usually come across two types… passive and active.

Passive ETFs are simple.
They track an index.

For example, the ASX 200.
You’re essentially investing in the top 200 companies in Australia and getting the same overall performance as the market.

Active ETFs are different.
There’s a fund manager making decisions behind the scenes.

They choose which companies to invest in,
when to buy,
and when to sell.

The idea is to outperform the market…
but that doesn’t always happen.

And with that extra management,
comes higher fees.

So it really comes down to what suits you.

Are you comfortable tracking the market consistently over time?
Or do you want to back a manager to try and outperform, knowing results can vary?

There’s no right or wrong.
It’s about understanding the difference and making a decision that aligns with you.

General advice only. This information is based on Australian regulations and does not take into account your personal circumstances.

Amy Lehmann is an Authorised Representative (No. 1292710) of Consortium Private Wealth Pty Ltd (AFS Licence 495401).

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