The S&P 500 has increased by only 2% and the Nasdaq has remained stable this year, leading many exchange-traded funds (ETFs) to perform similarly. Index ETFs typically mirror broad indexes, which have underperformed recently.

As index returns are projected to be lower than in previous years, there is potential value in actively managed ETFs. These funds are overseen by professional managers who select individual stocks.

The Cambria Global Value ETF (GVAL) has yielded approximately 11.4% year-to-date, outperforming major benchmarks. With an expense ratio of 0.64%, it comprises 214 stocks, including Moneta Bank, the First American Treasury Obligations Fund, and Komercni Banka.

The T. Rowe Price International Equity ETF (TOUS) focuses on non-US stocks, predominantly in developed markets. It has returned 9.8% so far this year, with a 0.50% expense ratio and holdings such as ASML Holding, Rolls Royce, and AstraZeneca.

Managed by Cathie Wood, the ARK Fintech Innovation ETF (ARKF) targets stocks involved in fintech. It is up 6% year-to-date and has seen a 44% increase over the past year. The fund has an expense ratio of 0.75% and includes stocks like Shopify, Coinbase Global, and Robinhood.

When we look at what has happened so far this year, one thing is clear—broad market indices have not had the kind of momentum that many investors might have hoped for. The S&P 500 has crept up by just 2%, while the Nasdaq has barely moved at all. This is reflected in many exchange-traded funds that track these indices since they are designed to follow their performance closely. When these benchmarks slow down, so do funds that mirror them.

This raises an important question for traders—should they continue to rely on passive, index-based ETFs, or consider actively managed funds where professional stock pickers make the decisions? The latter have demonstrated some promise, given that overall index returns are not keeping pace with past years.

Take the fund overseen by Meb Faber, for instance. So far this year, it has returned approximately 11.4%, far better than the largest market benchmarks. It holds more than 200 stocks, including banks from Europe and the US. While it comes with an expense ratio of 0.64%, traders may see this as a worthwhile cost if the performance gap remains wide.

Then there’s the ETF run by T. Rowe Price, which chooses stocks outside the US, mainly in well-established economies. It has delivered a return of 9.8% this year, also outpacing broad index funds. With a fee of 0.50%, this fund includes major names like a semiconductor firm based in the Netherlands and a well-known UK aerospace company.

Meanwhile, Cathie’s fund continues to focus on fintech companies, and it has grown by 6% this year. But for those who have been holding onto it for longer, the past 12 months have been even stronger, with a 44% increase. Given its focus on financial technology firms, the stocks in this fund include a Canadian e-commerce giant, a well-known cryptocurrency exchange, and a trading platform that gained attention during the retail investing surge. While it carries an expense ratio of 0.75%, some may find that justified if the sector continues its upward trajectory.

For those trading derivatives, these trends are worth paying attention to. The past few months suggest that broad indices have not been the easiest way to capture gains, and actively managed strategies have, in some cases, delivered better outcomes. If this pattern persists, those positioning themselves in the weeks ahead might need to reconsider how they allocate trades. Whether the approach should lean towards stock picking or sector-based funds depends on how these strategies continue to play out.