As active ETFs and active investing grow in significance, so too have the different ways active funds can be used. While many understand active funds in contrast to passive, index funds, the reality is more intricate. Active management can range from full, fundamental, bottom-up portfolio construction strategies to funds that combine active flexibility and rules-based, process-oriented investing. American Century Investments® ETF leaders sat down with VettaFi to talk about the firm and its active approach at the ETF Exchange conference in Las Vegas.

See more: The Future of Factors: American Century’s Casis Talks Factor ETFs

American Century Investments Head of ETF Product and Strategy Sandra Testani, Head of Strategy Implementation Rene Casis, and Global Head of ETF Capital Markets Matt Lewis all spoke to the continuing need for active ETF education, the benefits of active ETFs, and why the long-term risk of concentrated markets could call for active funds.

Active ETF Investing in 2025

For Testani, the firm’s goal in messaging at the conference focused on conveying how active ETFs can help advisors. The start of 2025 has created significant volatility, with tariff worries and consumer concerns speaking to active’s adaptability.

“I think active adaptability’s really been the key, really reinforcing, and now the market has kind of moved towards that message,” Testani said.

One way active ETF investing has changed has been their growing role as core portfolio building blocks. According to Casis, active can help address ongoing concentration risks that have recently spiked.

“I think the diversification benefits that were once inherent in market cap indexes are no longer present,” he said. “We’re seeing higher concentrated markets, especially in US growth. US growth gets a lot of the story, because that’s where the magnificent seven tends to live.”

“But, you can see that in the broader US market. You can also see that in some of the value spaces and so and fixed income, especially,” Casis added. “I think now more than ever, active management not only can help enhance returns, but it really kind of, interestingly, provide perhaps greater diversification.”

The American Century U.S. Quality Growth ETF (QGRO) presents a notable example of that active diversification. Not beholden to strictly tracking an index, QGRO takes a rules-based approach that invests in quality mid and large-cap names. Charging 29 basis points (bps), the fund applies fundamental metrics like return on assets and equity. Together, that has helped it return 20.6% over the last five years per American Century Investments data as of March 31st.

Connecting With Advisors

When communicating with advisors, Testani explained, she has found that some with significant ETF experience may benefit from education in active ETFs. By the same token, those advisors who understand active investing very well may be earlier in their ETF journey.

“It depends on the advisor, where they are in that education cycle,” she said. “Some don’t even really understand how you can have active in an ETF so we’re still at the level of educating.”

Looking ahead, amid the market tumult, advisors should aim to construct a well-balanced portfolio, Lewis explained. He cautioned that rather that timing the market, diversifying the types of strategies one holds may do better.

“As long as you have a well-diversified portfolio where you rebalance in some sort of sequence that you might have that over the long run, you will do better,” Lewis said. “The noise that the market brings every single day, you can get caught up in it. That’s where you’re going to maybe have some issues.”

American Century Investments and Avantis Investors offer a variety of active ETF strategies for investors to consider. For example, the firm offers the Avantis U.S. Equity ETF (AVUS) which charges a 15 basis point (bps) fee to actively invest in all-cap U.S. stocks with higher profitability or value traits. AVUS has returned 19.38% over the last five years as of March 31, beating its benchmark in the time. Looking ahead, active funds like AVUS could help construct that well-balanced portfolio for investors curious about active.

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