What is the difference between active and index (passive) ETFs?

Active ETFs
Active ETFs are usually based on research and the portfolio manager’s discretion within the investment policies of the ETF, as with an active mutual fund. The difference in investment style and strategy is depending on the ETF’s objective and its portfolio management team. Most ETFs in the active space are based on pre-existing strategies. Because the manager is picking stocks based on research, some actively managed funds are not tethered to an index.

Index (Passive) ETFs
Index, or Passive, ETFs are tethered to an underlying index, like the S&P 500, Dow Jones Industrial Average, or a custom index. Fund management is focused on matching the underlying index instead of making decisions based on fundamental or quantitative research. An index ETF follows its underlying index as its benchmark.

ARK believes that its consistent investment process and active management of high-conviction portfolios capitalizes on rapid change and avoids industries and companies likely to be displaced by innovation. ARK uses its own scoring system to continuously value companies and monitor the underlying investment thesis. As scores change, ARK’s investment team adjusts stock positions in the portfolio.