A type of exchange traded fund (ETF) that is run by a manager that actively engages in decision making and selection/ alteration of the portfolio composition. A manager packages and deploys underlying securities or investments investment strategies, and decides which companies to include or exclude. The securities that make up the fund are not determined by an index, but rather by the subjective decision of the manager. The manager decides which securities to buy, when to do so (marketing timing), what weight to assign to them, and the need to include other types of assets such as debt securities or commodities.

In contrast, a passively managed ETF, such as an index ETF, is designed to merely hold a basket of securities that tracks a specific market index. Actively managed ETFs take advantage of the possibility to decide the securities/ assets/ investments to be included in the ETF. Actively managed ETFs can invest in undervalued securities and undertake certain practices of risk management. The fund is expected to properly reflect market dynamics and shifts in economic conditions.

An actively managed ETF is quite similar to a investment fund. as both involve active management of the underlying securities/ assets/ investments.