3 Active ETFs for 2026 and Beyond

Key Concepts

Active ETFs: Exchange Traded Funds managed with a specific investment strategy aiming to outperform a benchmark.
Munis (Municipal Bonds): Debt securities issued by state and local governments, typically tax-exempt.
Investment Grade Bonds: Bonds with a relatively low risk of default, rated BBB- or higher by rating agencies.
Below Investment Grade Bonds (High-Yield Bonds/Junk Bonds): Bonds with a higher risk of default, offering potentially higher yields.
Revenue Bonds: Municipal bonds backed by the revenue generated from a specific project (e.g., toll roads, water systems).
Quality Stocks: Stocks of companies with strong financial health, consistent earnings, and stable dividends.
Dividend Growth: A strategy focused on investing in companies that consistently increase their dividend payouts.
Fundamental Research: Analyzing a company’s financial statements and business model to determine its intrinsic value.
Blend & Growth Stocks: A mix of value and growth stocks in a portfolio.
Cyclical Stocks: Stocks whose performance is closely tied to the economic cycle.

Active ETF Opportunities for 2026 and Beyond

The video highlights three actively managed Exchange Traded Funds (ETFs) identified as potentially strong investments for 2026 and the coming years, focusing on areas currently “slightly out of favor.” The selection criteria emphasize strong management teams, low fees, and potential tax advantages.

Capital Group Municipal Income (CGMU)

This Silver-rated ETF focuses on municipal bonds (Munis). The speaker emphasizes the defensive characteristics of Munis, noting their historically low default rates, even during economic recessions. The fund’s management team is praised for their portfolio construction, which includes a portion of bonds below investment grade. This isn’t presented as a risk, but rather as a component of a “well-diversified portfolio” with a particular emphasis on revenue bonds. Revenue bonds are highlighted for providing “consistent cash streams.” The video doesn’t specify the exact percentage allocated to below investment grade bonds, but frames it as a strategic element within a broader, diversified approach.

Troll Price Dividend Growth (TDVG)

The second recommended ETF is TDVG, managed by Tom Huber, focusing on quality stocks. The speaker notes that quality stocks experienced a downturn in 2025, creating an attractive entry point for 2026. The appeal lies in their defensive nature and the added benefit of dividend growth. TDVG boasts a low expense ratio of 0.5%. The video suggests that the relative underperformance of quality stocks in the previous year presents a buying opportunity, anticipating a potential rebound.

Newberger Burman Small Midcap (NBSM)

The final ETF, NBSM, is a recently launched fund (2024) with initially “very unimpressive returns.” However, the speaker stresses that the underlying investment strategy has a long and proven track record dating back to 1994. This strategy is characterized by a tendency to underperform during market rallies but to recoup losses – and potentially outperform – during down or sideways markets. NBSM’s investment approach is rooted in “fundamental research,” specifically focusing on companies with “healthy balance sheets” and strong “returns on assets.” The portfolio is described as spanning both blend and growth styles, and encompassing small and mid-cap companies. Notably, the fund holds a significant allocation to financials and cyclical stocks, despite being categorized as a mid-growth fund. The speaker concludes with a confident assertion: “Trust me, it’s better than the last 21 months suggest.”

Logical Connections & Synthesis

The video presents a cohesive argument for active ETF investing, particularly in undervalued or overlooked segments. The selection of these three ETFs isn’t random; each addresses a specific market dynamic. CGMU offers defensive stability, TDVG provides potential for dividend-driven returns in a potentially recovering quality stock environment, and NBSM represents a contrarian bet on a proven strategy that may be currently out of favor. The common thread is a focus on strong management, disciplined investment processes, and a willingness to look beyond short-term performance metrics.

The main takeaway is that identifying well-managed active ETFs with reasonable fees can provide investors with opportunities to outperform the market, especially in sectors poised for a turnaround or offering inherent defensive characteristics.