Antipodes Partners goes actively passive

by , 9th November 2018

Australian based equity manager Antipodes Partners has launched an actively managed ETF, Antipodes Global Shares (AGX1). Quoted on the Australian Securities Exchange (ASX), AGX1 will track the MSCI All Countries World Net Index.

AGX1 will provide access for retail investors to at least 30 companies from around the globe which comprise the ETF. The companies will be selected depending on their risk management and margin of safety in the company’s bid to outperform the benchmark.

According to Andrew Findlay, Managing Director at Antipodes Partners, the number of ETFs and active ETFs listed on the ASX has grown at an annual rate of 23 per cent. The significant growth is a result of high demand from investors which is what triggered the latest launch by Antipodes.

But this does lead to the argument: is an active ETF really an ETF? Arian Neiron, MD at VanEck published a post on the company’s website earlier this year questioning this point exactly. Neiron argues that a (passive) ETF is meant to be cheap, transparent and track its benchmark index. An active ETF on the other hand tries to outperform its benchmark which requires regular management. Therefore, it usually results in the ETF to not be as cheap and not needed to disclose the fund’s holdings at any given time.

It is also arguable that active ETFs are used to bridge the gap between active and passive investing. The ETP industry is constantly developing but active managers might be reluctant to incorporate them into their portfolios. Therefore, active ETFs could be an ideal stepping stone for this transition.