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The Exchange-Traded Fund: A Time For Active Management? Bloomberg Law Reports: Fund Management. Vol. 2, No. 9, November, 2006.

ETFs have operated under the same passive investment management paradigm since they first hit the market in 1993. Each ETF seeks to replicate, as closely as possible, the returns before fund expenses and the overall investment experience of a specified underlying index. The investment adviser operates under the strict passive mandate of replicating the chosen index and changes are made only in order to match changes in the selected index. However, unlike a traditional open-end index mutual fund, ETF shares are listed and traded intraday on a national securities exchange.

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