As their name would imply, active ETFs are actively managed. A fund manager or team oversees the ETF. Actively managed ETFs offer similar benefits in terms of liquidity and tax efficiency to passive ETFs and have a benchmark index, but the managers of these funds may deviate from the index in response to market changes or where they see fit. Essentially, the portfolio construction is at the discretion of the fund manager.
Though it is their goal, it’s important to remember there is no guarantee an Active ETF will outperform a passive equivalent. As active managers have the freedom to trade outside the index, shareholders may not always know their portfolio construction. ASIC’s regulatory measures aim to protect traders and investors alike. ETF investors typically have a transparent view of their fund’s holdings and investment value.