3 Actively Managed ETFs Outperforming Despite Their Higher Fees

Key Points

• Actively managed ETFs typically have higher—and sometimes much higher—expense ratios than passive funds.
• In exchange, investors expect outsized performance or unique and complex strategies.
• Three actively managed funds—CGRO, AMZA, and PJIO—offer compelling returns that may outweigh their relatively high fees.

Expense ratios for exchange-traded funds (ETFs)—the measure of how much an investor must pay annually in order to invest in the fund—have trended downward recently. Passively managed funds had an average expense ratio of roughly 0.15% as of 2023, driven down in part by a highly competitive space in which providers race to undercut one another to provide cheaper and cheaper access.

Actively managed funds, for which fund managers typically engage in a more hands-on approach to portfolio management, usually have higher fees than passive funds, although these rates have also declined. Still, with a plethora of inexpensive passive options available, investors expect active funds to perform notably well—or to have a unique and specialized strategy unavailable elsewhere—in order to compete.

Sometimes, though, the higher fees of an actively managed fund can be worthwhile. Three such funds have started 2025 with a burst of momentum, far surpassing the lackluster 0.5% return of the S&P 500 year-to-date through February 28.

High-Growth, U.S.-Aligned Chinese Investments

The CoreValues Alpha Greater China Growth ETF NYSEARCA: CGRO targets Chinese securities in high-growth sectors, with an emphasis on aligning with U.S. national security interests. This means that investors in CGRO achieve access to major Chinese firms like sponsored American Depositary Receipts (ADRs) of Alibaba Group Holding Ltd. NYSE: BABA as well as niche firms not typically on a U.S. investor's radar.

Given the massive size of the Chinese equities space, the active approach to portfolio management for CGRO may appeal to investors lacking the time or capacity to develop expertise in Chinese companies. It should be noted that CGRO is a niche fund with a small asset base and low trading volume to match—it may, therefore, appeal to investors seeking to buy and hold shares over an extended period of time, as more active trading may become challenging.

Still, the fund's recent performance suggests that a buy-and-hold approach may be worthwhile. CGRO has returned an impressive 41% in the last year and nearly 18% year-to-date as of February 28, far ahead of the broader market on both timescales. Its expense ratio of 0.75%, though higher than most passive funds, is modest compared to many other active ETFs.

Complex Approach to Midstream MLPs Means Higher Fees But Impressive Performance

On the other end of the expense ratio spectrum is the InfraCap MLP ETF NYSEARCA: AMZA, which has an annual fee of 2.75%. For that fee, investors get access to a variety of midstream master limited partnerships (MLPs) with an emphasis on high current income. Midstream MLPs provide crucial transportation and storage services for the oil and gas industry.

AMZA's portfolio of roughly 30 names is highly concentrated in the top handful of securities, and the fund's managers employ leverage in the range of 20-30%. The fund also employs options strategies in an effort to diversify sources of income for investors.

Together, this combination of strategies explains the high cost of investing in AMZA and suggests that the fund likely carries a risk level that is higher than most index-tracking passive funds. On the other hand, AMZA's performance in the last year has been impressive—it has returned just under 30% in the last 12 months and 12% year-to-date as of February 28.

Picking the Gems From the Vast International Equities Space

Many investors in the U.S. lack broad knowledge of the international equities space, and the PGIM Jennison International Opportunities ETF NYSEARCA: PJIO fills that gap. Investors looking for access to high-growth firms in emerging markets that have sustainable competitive advantages and reasonable valuations might seek out PJIO.

PJIO is a true international fund, with securities representing France, Taiwan, Germany, Italy, and many other countries in its basket. Consumer discretionary companies see the largest allocation of assets, at about 37% as of January 31, 2025, while information technology is also well-represented.

As an actively managed fund, PJIO responds quickly to changes in fortune for the companies in its portfolio, taking the effort of monitoring the vast international space off of the shoulders of an individual investor. This oversight comes at a price, though, and the fee for PJIO is 0.90% annually. For that fee, though, investors in PJIO have achieved nearly 8% returns year-to-date in 2025.