Institutional portfolios have long operated with that distinction in mind. Exposure is not assumed to be neutral. It is something to be shaped, adjusted, and, where necessary, constrained.
That mindset is increasingly relevant for advisors. Core beta still plays a central role. But certain parts of the portfolio — credit, sector allocations, income strategies — are harder to leave entirely to index construction.
The shift is not away from passive investing. It is toward a more deliberate allocation of responsibility within the portfolio. “The stronger portfolios will actually combine both,” Carle-Mossdorf says.
Regulatory change is reinforcing that direction. CRM3 has elevated transparency requirements, sharpening how advisors articulate value to their clients. “That clarity encourages more deliberate portfolio design,” he says, “and active ETFs align well with this environment because their objectives, costs, and roles are easy to explain. Whether the goal is risk management, income, or alpha, within a highly efficient structure.”
For advisors weighing where to introduce active strategies, two segments stand out. Firstly, fixed income, especially credit, benefits from active oversight given the importance of duration management, issuer quality, and liquidity.