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This New Active ETF Is Cheaper Than the Average Passive Fund

PGIM Investments’ new large-cap core ETF provides an active strategy at a passive price.

A new actively managed, exchange traded fund from PGIM Investments will cost 17 basis points, compared with the average large blend passive ETF, which costs 33 basis points, according to Morningstar data.

PGIM launched the first of four actively managed ETFs that will come out this year; the PGIM QMA Strategic Alpha Large-Cap Core ETF will be sub-advised by QMA, a subsidiary of PGIM.  

The manager plans to roll out three additional active ETFs this year—the PGIM QMA Strategic Alpha Small-Cap Growth ETF, the PGIM QMA Strategic Alpha Small-Cap Value ETF, and the PGIM QMA Strategic Alpha International Equity ETF. The firm introduced two actively managed bond ETFs earlier this year.

“Our research shows that investors frequently overpay for stocks that have a low probability of outsized returns or may provide lower risk,” QMA Chairman and CEO Andrew Dyson said in a statement. “We’ve found a way to help protect investors from such behavioral biases.”


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