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Historically, most exchange-traded funds (ETFs) have been passive, designed to track or mimic a specific index, until now.

While passive management has dominated the market since the Global Financial Crisis, there is a growing demand for actively managed ETFs, which have been dubbed “the next frontier in investor innovation.”1

Because of their transparency, flexibility, and tax efficiency, investors now have more choices than ever.

Because of their transparency, flexibility, and tax efficiency, investors now have more choices than ever.

The growth of active ETFs is driven by traditional fund managers realizing that ETFs serve as a great wrapper and investment vehicle for a broad range of strategies, with projections that active ETFs will reach $4 trillion in AUM by 2030.2 This trend is also particularly relevant as investors seek actively managed options to help navigate today’s turbulent markets.

Active ETFs defined

Active ETFs are designed to outperform a benchmark index or sector. Helmed by professional fund managers, these ETFs use a proprietary mix of quantitative and qualitative investment strategies to inform buy and sell decisions.

An active ETF aims to deliver alpha, providing a risk-adjusted return that beats a benchmark.[3]

An active ETF aims to deliver alpha, providing a risk-adjusted return that beats a benchmark.3

The rise of active

Active ETFs are increasingly popular among the next generation of retail and institutional investors, financial advisors, and other intermediaries. According to Morningstar, the number of active ETFs has increased fivefold since the beginning of 2019, and AUM in such funds has grown by a factor of seven over the past five years .4

Their rise stems from a mixture of legislation, product development, and market events and trends that brought their unique advantages into focus. Here’s why:

Potential for outperformance

Active ETFs are managed by professional portfolio managers who leverage their expertise to select securities they believe will outperform the market. This approach can potentially generate higher returns compared to passive ETFs, which track an index.

A recent study revealed that within model portfolios that already included at least one active ETF, the average allocation to active ETFs grew from 12% in 2021 to 19.3% by the first quarter of 2024. This analysis specifically focused on portfolios containing active ETFs rather than providing an industry-wide assessment of active ETF adoption.[1]

Adaptability to market conditions

Active managers can adjust their portfolios in response to changing market conditions, economic trends, and emerging opportunities. This flexibility allows them to capitalize on market inefficiencies and mitigate risks more effectively than passive strategies.

Diversification and risk management

Active ETFs offer more tailored diversification and risk management strategies. Managers can select a mix of assets aligned with specific investment goals, risk tolerances, and market outlooks, providing a customized investment experience.

Flexibility and tax efficiency

Active ETFs differ from mutual funds in that they are much more tax efficient. Mutual funds, typically distribute capital gains less frequently, which allows for more effective and frequent tax-loss harvesting.

Active ETFs can be a valuable addition to a broader portfolio that includes index-based holdings. They aim to deliver incremental returns or other client-specific outcomes. Their flexibility and tax efficiency have the potential to enhance overall portfolio models, helping to improve client outcomes.

Innovation and thematic investing

Active ETFs often focus on innovative and thematic investment strategies that align with long-term trends, ideas, beliefs, and objectives. These strategies may focus on themes such as disruption, megatrends, sustainable investing, and unique insights and outcomes. By doing so, they can offer exposure to high-growth sectors and emerging trends that traditional index-based ETFs might overlook.

Active measures of risk

As with passive ETFs, investors can use beta and standard deviation to assess whether an active product meets its objective.5,6 Additionally, there are two key risk metrics specifically applicable to active ETFs:

  • Alpha3
    A measure of how an ETF performs relative to a particular index or benchmark over a specified period, adjusted for volatility. It allows investors to determine whether a fund is outperforming or underperforming a passive benchmark. This metric is expressed as a percentage. For instance, an ETF with 3% alpha has exceeded its benchmark by 3%, accounting for the volatility of the fund’s portfolio.
  • Sharpe ratio
    The Sharpe ratio measures an ETF’s excess returns relative to its volatility. It indicates how much excess return is generated per unit of risk taken. The Sharpe ratio is expressed numerically, and anything above one is considered good. A higher number implies that an investor is compensated for taking on extra risk with relatively outsized returns. This metric helps determine whether an active ETF is taking substantial risk to achieve outperformance. Ideally, an ETF will deliver above-average returns with low volatility.

Why choose either active or passive

Both styles of ETFs have their merits. Passive ETFs are ideal for investors seeking index-like returns with very low fees. Conversely, investors may gravitate towards active ETFs to outperform the market, driven by the belief that professional managers can achieve superior returns.

Final thoughts

We believe active ETFs are a compelling investment option for those seeking higher returns through professional management and strategic asset selection. With their flexibility, transparency, and accessibility, active ETFs can be valuable to any investment portfolio. As demand for actively managed funds continues to grow, investors can benefit from innovative strategies and the potential for outperformance. Finally, the ETF structure makes unlocking the diversification potential of a modern investment portfolio easier. Time to get active.

1 "The Year of the Active ETF." Institutional Investor, March 2025. https://www.institutionalinvestor.com/article/2eesgfd1awgu19g2ypekg/innovation/the-year-of-the-active-etf.
2 "Decoding active ETFs." BlackRock, December 2023. https://www.blackrock.com/ca/institutional/en/literature/market-commentary/decoding-active-etfs-ca-en.pdf.
3 Alpha is a measure of performance, on a risk-adjusted basis, calculated by a comparison of the volatility of the portfolio vs its benchmark, on a risk-adjusted basis. A positive alpha of 1.0 means the fund outperformed its benchmark index by 1%, while a negative alpha indicates underperformance.
4 Morningstar's Guide to US Active ETFs." Morningstar, June 2024. https://www.morningstar.com/business/insights/research/guide-to-us-active-etfs.
5 Beta measures the sensitivity of a fund in regards to the movement of its benchmark. A beta over 1.0 means that the investment has been more volatile than the benchmark, while a beta of less than 1.0 represents less volatility.
6 A standard deviation is a statistical measurement that sheds light on historical volatility. For example, a volatile stock will have a high standard deviation while the deviation of a stable blue-chip stock will be lower. A large dispersion tells us how much the return on the fund is deviating from the expected normal returns.

Important information

Investing in ETFs involves risk, including possible loss of principal. There is no assurance that the investment objective of any fund will be achieved. ETF shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. As a result, an investor may pay more than net asset value when buying and receive less than net asset value when selling. In addition, brokerage commissions will reduce returns. Fund shares are not individually redeemable directly with the Fund but blocks of shares may be acquired from the Fund and tendered for redemption to the Fund by certain institutional investors in Creation Units.

The value of a security may decline for reasons directly related to the issuer, such as management performance, financial leverage and reduced demand for the issuer’s goods or services. The stock or other security of a company may not perform as well as expected, and may decrease in value, because of factors related to the company, to the industry in which the company is engaged, or to the market as a whole. The Fund is subject to the risk that the Adviser or Subadviser may make poor security selections. Funds that invest a greater proportion of their assets in the securities of a smaller number of issuers will be subject to greater volatility with respect to their investments than funds that invest in a larger number of securities. Securities of smaller companies are usually less stable in price and less liquid than those of larger, more established companies. Therefore, they generally involve greater risk.

abrdn Inc. has been registered as an investment adviser under The Investment Advisers Act of 1940 since August 23, 1995. In the United States, abrdn is the marketing name for the following affiliated, registered investment advisers: abrdn Inc., abrdn Investments Limited, and abrdn Asia Limited.

abrdn's exchange-traded funds are distributed by ALPS Distributors, Inc.
ALPS is not affiliated with Aberdeen Investments.

EAF000143 4/30/26
AA-290425-192692-2

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Investors should carefully consider a fund’s investment objectives, risks, fees, charges, and expenses before investing any money. To obtain this and other fund information, please call 866-667-9231 to request a summary prospectus and/or prospectus, or download at www.aberdeeninvestments.com/en-us. Please read the summary prospectus and/or prospectus carefully before investing any money.

Aberdeen Fund Distributors, LLC is a wholly owned subsidiary of abrdn Inc. abrdn Inc. is a wholly-owned subsidiary of Aberdeen Group plc. abrdn Funds are distributed by Aberdeen Fund Distributors LLC, Member FINRA and SIPC. 1900 Market Street, Suite 200, Philadelphia PA, 19103.

NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE

For ETFs, please call 844-383-7289 or click here to access a prospectus online. Investing involves risk, including possible loss of principal. ETF shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund.

Important Risks

The abrdn Gold ETF Trust, abrdn Silver ETF Trust, abrdn Precious Metals Basket ETF Trust, abrdn Platinum ETF Trust and abrdn Palladium ETF Trust are not investment companies registered under the Investment Company Act of 1940 or a commodity pool for purposes of the Commodity Exchange Act. Shares of the Trusts are not subject to the same regulatory requirements as mutual funds. These investments are not suitable for all investors. Trusts focusing on a single commodity generally experience greater volatility.

Commodities generally are volatile and are not suitable for all investors. Trusts focusing on a single commodity generally experience greater volatility. Please refer to the prospectus for complete information regarding all risks associated with the Trusts. Shares in the Trusts are not FDIC insured and may lose value and have no bank guarantee.

The value of the Shares relates directly to the value of the precious metal held by the Trust and fluctuations in the price could materially adversely affect investment in the Shares. Several factors may affect the price of precious metals, including:

A change in economic conditions, such as a recession, can adversely affect the price of the precious metal held by the Trust. Some metals are used in a wide range of industrial applications, and an economic downturn could have a negative impact on its demand and, consequently, its price and the price of the Shares;

Investors’ expectations with respect to the rate of inflation;

Currency exchange rates;

Interest rates;

Investment and trading activities of hedge funds and commodity funds; and

Global or regional political, economic or financial events and situations. Should there be an increase in the level of hedge activity of the precious metal held by the trust or producing companies, it could cause a decline in world precious metal prices, adversely affecting the price of the Shares. Should there be an increase in the level of hedge activity of the precious metal held by the Trusts or producing companies, it could cause a decline in world precious metal prices, adversely affecting the price of the shares.

Also, should the speculative community take a negative view towards the precious metal held by the Trusts, it could cause a decline in prices, negatively impacting the price of the shares. There is a risk that part or all of the Trusts’ physical precious metal could be lost, damaged or stolen. Failure by the Custodian or Sub-Custodian to exercise due care in the safekeeping of the precious metal held by the Trusts could result in a loss to the Trusts.

The Trusts will not insure its precious metals and shareholders cannot be assured that the custodian will maintain adequate insurance or any insurance with respect to the precious metals held by the custodian on behalf of the Trust. Consequently, a loss may be suffered with respect to the Trust’s precious metal that is not covered by insurance.

Commodities generally are volatile and are not suitable for all investors.

Investors buy and sell shares on a secondary market (i.e., not directly from Trusts). Only market makers or "authorized participants" may trade directly with the Trusts, typically in blocks of 25k to 100k shares.

Commodities generally are volatile and are not suitable for all investors. This material must be accompanied or preceded by the prospectus. Carefully consider each Trust’s investment objectives, risk factors, and fees and expenses before investing. Please click here to review the prospectus.

ALPS Distributors, Inc. is the marketing agent for the abrdn Gold ETF Trust, abrdn Silver ETF Trust, abrdn Precious Metals Basket ETF Trust, abrdn Platinum ETF Trust and abrdn Palladium ETF Trust.

ALPS Distributors, Inc. is the distributor for abrdn ETFs.

ALPS Distributors, Inc. is not affiliated with the companies of Aberdeen.

'40 Act Fund Disclosure:

An investor should consider the investment objectives, risks, charges and expenses of the ETFs carefully before investing. To obtain a prospectus containing this and other important information, call 1-844-383-7289 or visit www.abrdn.com/us/etf. Read the prospectus carefully before investing.

Fund Risk: There are risks associated with investing including possible loss of principal. Commodities generally are volatile and are not suitable for all investors. There can be no assurance that the Fund’s investment objective will be met at any time. The commodities markets and the prices of various commodities may fluctuate widely based on a variety of factors. Because the Fund's performance is linked to the performance of highly volatile commodities, investors should consider purchasing shares of the Fund only as part of an overall diversified portfolio and should be willing to assume the risks of potentially significant fluctuations in the value of the Fund. Actively managed ETFs do not necessarily seek to replicate the performance of a specified index. Actively managed ETFs are subject to risks similar to stocks, including those related to short selling and margin maintenance. The Fund’s return may not match the return of the index.

Through holding of futures, options and options on futures contracts, the Fund may be exposed to (i) losses from margin deposits in the case of bankruptcy of the relevant broker, and (ii) a risk that the relevant position cannot be close out when required at its fundamental value. In pursuing its investment strategy, particularly when rolling futures contracts, the Fund may engage in frequent trading of its portfolio of securities, resulting in a high portfolio turnover rate.
As a "non-diversified" fund, the Fund may hold a smaller number of portfolio securities than many other funds. To the extent the Fund invests in a relatively small number of issuers, a decline in the market value of a particular security held by the Fund may affect its value more than if it invested in a larger number of issuers. The value of Shares may be more volatile than the values of shares of more diversified funds.

During situations where the cost of any futures contracts for delivery on dates further in the future is higher than those for delivery closer in time, the value of the Fund holding such contracts will decrease over time unless the spot price of that contract increases by the same rate as the rate of the variation in the price of the futures contract. The rate of variation could be quite significant and last for an indeterminate period of time, reducing the value of the Fund.

Changes in the laws of the United States and/or the Cayman Islands, under which the Fund and the Subsidiary are organized, respectively, could result in the inability of the Subsidiary to operate as intended and could negatively affect the Fund and its shareholders.

To the extent the Fund is exposed directly or indirectly to leverage (through investments in commodities futures contracts) the value of that Fund may be more volatile than if no leverage were present.

In order to qualify for the favorable U.S. federal income tax treatment accorded to a regulated investment company ("RIC"), the Fund must derive at least 90% of its gross income in each taxable year from certain categories of income ("qualifying income") and must satisfy certain asset diversification requirements. Certain of the Fund’s investments will not generate income that is qualifying income. The Fund intends to hold such commodity-related investments indirectly, through the Subsidiary. The Fund believes that income from the Subsidiary will be qualifying income because it expects that the Subsidiary will make annual distributions of its earnings and profits. [However, there can be no certainty in this regard, as the Fund has not sought or received an opinion of counsel confirming that the Subsidiary’s operations and resulting distributions would produce qualifying income for the Fund.] If the Fund were to fail to meet the qualifying income test or asset diversification requirements and fail to qualify as a RIC, it would be taxed in the same manner as an ordinary corporation, and distributions to its shareholders would not be deductible by the Fund in computing its taxable income. Investors buy and sell shares on a secondary market (i.e., not directly from the Trust). Only market makers or authorized participants may trade directly with the funds, typically in blocks of 25K to 100K shares.

The abrdn Bloomberg Industrial Metals K-1 Free ETF is new and has limited operating history.

“Bloomberg®” and “Bloomberg Commodity Index Total ReturnSM,” “Bloomberg Commodity Index 3 Month ForwardSM” and “Bloomberg Industrial Metals Subindex Total ReturnSM” are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the indices (collectively, “Bloomberg”) and have been licensed for use for certain purposes by abrdn ETFs Advisors LLC. Bloomberg is not affiliated with abrdn ETFs Advisors LLC, and Bloomberg does not approve, endorse, review, or recommend abrdn Bloomberg All Commodity Strategy K-1 Free ETF (BCI), abrdn Bloomberg All Commodity Longer Dated Strategy K-1 Free ETF (BCD), and abrdn Bloomberg Industrial Metals K-1 Free ETF (BCIM). Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to Bloomberg Commodity Index Total Return, Bloomberg Commodity Index 3 Month Forward” and “Bloomberg Industrial Metals Subindex Total Return".

Please see the current prospectus, www.abrdn.com/us/etf for more information regarding the risk associated with an investment in the Funds.

S&P 500: The S&P 500 Index is the Standard & Poor’s composite index of 500 stocks, a widely recognized, unmanaged index of common stock prices.

Standard Deviation: Standard deviation is a statistical measure of the extent to which returns of an asset vary from its average.

Bloomberg Commodity Index: The Bloomberg Commodity Index (BCOM) is a broadly diversified commodity price index distributed by Bloomberg Indexes.

Discount- A situation when the share price of a fund trades below its net asset value.

Premium- A situation when the share price of a fund trades above its net asset value.

The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market.

Annualized Volatility is a statistical measure of the dispersion of returns for a given security or market index

Beta is a measure of the volatility, or systematic risk, of an individual stock in comparison to the unsystematic risk of the entire market

Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk
NAV or Net Asset Value represents the per share/unit price of the fund on a specific date or time.

All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments there are associated inherent risks. Please obtain and review all financial material carefully before investing.

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Alternative investments involve specific risks that may be greater than those associated with traditional investments; are not suitable for all clients; and intended for experienced and sophisticated investors who meet specific suitability requirements and are willing to bear the high economic risks of the investment. Investments of this type may engage in speculative investment practices; carry additional risk of loss, including possibility of partial or total loss of invested capital, due to the nature and volatility of the underlying investments; and are generally considered to be illiquid due to restrictive repurchase procedures. These investments may also involve different regulatory and reporting requirements, complex tax structures, and delays in distributing important tax information.

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