Please stay tuned for important disclosure information at the conclusion of this episode.

Welcome to Investing Insights. I'm your host, Ivanah Hampton. Active fund choices are multiplying. Some big firms behind popular open-end funds are rolling out similar or identical,

actively managed exchange traded funds. Both come with pros and cons. So what should you

consider before modifying your portfolio? Russ Kennell is the director of ratings for Morningstar

Research Services. Here's my conversation with the Fund Investor newsletter editor.

Thanks for being here, Russ.

Glad to be here.

Let's start with what's similar and different between open-in funds and active ETFs.

Yeah, so similarities are you get a diversified portfolio generally, similar regulatory structured,

usually the same fund companies are running the ETFs and open ends.

Where they differ are,

ETFs have a tax advantage,

they don't have to distribute capital gains,

ETFs don't have to pay service fees,

so they tend to have lower expenses,

not always, but they tend to have lower expenses, not always, but they

tend to have lower expenses. And ETFs trade minute to minute, whereas open-end funds, you

just get the day in closing price.

And active ETFs are growing in popularity. Can you describe some of their advantages?

Yeah. So they have the lower fees and the better tax

situation. They also have daily transparency, which matters to some people, but not to others.

But it's probably the tax advantage that's the biggest difference because actively managed

...