The world of investing isn’t short on fund types. And just when you think you’ve wrapped your head around one, a new option appears.

Exchange-traded managed funds, also known as ETMFs, are one of those options. You’ll find them listed on the Australian Securities Exchange (ASX) , sitting alongside traditional exchange-traded funds (ETFs) and listed investment companies . But they don’t work in quite the same way.

ETMFs aim to offer the best of both worlds: the accessibility of ETFs and the flexibility of managed funds. Still, there are key differences to know before deciding whether they make sense for your portfolio.

In this article, we’ll unpack what ETMFs are, how they compare to similar investments, and what to consider before investing in them.

What are exchange-traded managed funds?

An exchange-traded managed fund (ETMF) is a type of fund you can buy and sell on the ASX . At first glance, it looks like an ETF . You trade it through a broker, and it appears alongside other listed funds.

But unlike most ETFs, which aim to track an index, ETMFs are actively managed . This means a fund manager makes the investment decisions, rather than following a set list of companies.

The goal is to outperform the market or meet a specific investment objective, not just match a benchmark. Because of this active approach, ETMFs tend to work a little differently behind the scenes.

• For one, they usually don’t disclose their holdings every day. This gives managers more freedom to adjust the portfolio without revealing their strategy in real time.
• They also use a unit pricing model. Instead of trading based on what buyers are willing to pay, the price reflects the value of the fund’s assets.
• To keep trades flowing, ETMFs rely on market makers . These are firms that help match buyers with sellers and manage the supply of units on the market.

In short, ETMFs combine the accessibility of ETFs with the flexibility of traditional managed funds .

How do ETMFs differ from other popular fund types?

Now we know that ETMFs sit somewhere between managed funds and ETFs. But how do they compare to the options investors may already know?

Let’s break it down.

Traditional exchange-traded funds

• Management style : Most ETFs are aligned with a passive investing approach. They aim to match the performance of a commodity or market index, like the ASX 200 and S&P 500 .
• Transparency : ETFs usually publish their full holdings daily. ETMFs, as we’ve said, don’t always offer that level of visibility.
• Pricing : ETFs trade at market value throughout the day. ETMFs may use a unit price based on the fund’s value at the end of the day.
• Settlement : Both are traded through the ASX and settle via CHESS . This means they show up in your brokerage account and can be bought or sold like shares.

Traditional managed funds

• Access : Managed funds are typically accessed through the provider, not through a brokerage account. They often have higher minimum investment amounts.
• Buying and selling : You apply for units and wait for the fund to process your request. This can take a day or two.
• Pricing : Trades are processed at the fund’s end-of-day unit price. You won’t know the exact price until after the transaction is finalised.
• How ETMFs differ : With ETMFs, you place trades instantly on the exchange. No need to go through a separate platform. This can offer more flexibility for everyday investors.

Micro-investing managed funds

• Access : Micro-investing platforms allow users to invest small amounts regularly. Features like round-ups and recurring deposits are common.
• Structure : These platforms typically invest in managed funds, so the structure is similar to traditional funds rather than listed ones.
• Automation : Investment decisions and rebalancing are often automated . This differs from ETMFs, where you choose when and what to buy.
• Platform dependency : Micro-investing is tied to the platform’s interface and features. And as we’ve said, ETMFs are traded directly on the ASX via a brokerage account.
• How ETMFs differ : ETMFs offer access to professionally managed investments but without relying on an app or platform-specific tools.

Listed investment companies

• Structure : Listed investment companies (LICs) are companies, not funds. They raise capital upfront and trade on the ASX like a share .
• Pricing : LICs trade at market prices, which may be higher or lower than the value of the underlying investments (known as net asset value, or NAV). This can result in premiums or discounts.
• ETMF difference : ETMFs aim to track their NAV closely. Market makers help keep the trading price in line with the fund’s value.
• Dividends : LICs may offer franking credits with dividends, as they’re structured as companies. ETMFs distribute income like a managed fund, usually without franking credits.

Each fund type has its own features, depending on how it’s built and where it trades. ETMFs borrow from several of these ideas, but bring their own format to the table.

What are the potential benefits of ETMFs?

ETMFs aim to offer a mix of flexibility, access, and professional management. Here are some of the potential benefits.

Active management with easier access

ETMFs give you access to active investment strategies through the ASX, using your regular brokerage account. You don’t need to apply through a provider or meet comparatively higher minimums.

As mentioned, these funds are managed by professionals who choose investments based on research or specific objectives.

Traded on the ASX

As ETMFs are listed like shares and ETFs, you can buy or sell units during market hours. You can view prices, place orders, and monitor performance through the same platform you use for other investments.

This makes them more accessible than traditional managed funds, which are often handled outside the exchange.

No need for extra platforms

Everything runs through your existing broker. There’s no need to sign up with a fund provider or log into a separate system to invest. This can make it easier to track and manage your portfolio in one place.

Diversified exposure

ETMFs may invest in a broad mix of assets. These can include sectors or strategies that aren’t available in index-tracking ETFs . Depending on the fund, this could mean access to niche industries, small companies, or specific themes.

Each ETMF is different, so it’s worth reading the fund’s product disclosure statement (PDS) to understand what’s included.

What are the risks?

As with any investment, ETMFs come with trade-offs. Their structure brings flexibility, but also a few potential downsides worth knowing.

Less visibility of holdings

Most ETFs publish their holdings daily, giving investors a clear view of what’s inside. As we’ve noted, ETMFs may delay this disclosure to protect the fund manager’s strategy.

This can make it harder to track exactly where your money is invested at any given time.

Different pricing mechanics

ETMFs often use net asset value (NAV) pricing. That means your order may be processed at the end of the trading day, not instantly. Some ETMFs use market makers to keep prices aligned with NAV, but price certainty can still vary.

Settlement may also take longer than with standard ETFs, which could affect timing if you need to access funds quickly.

Lower trading volume

Many ETMFs are still building market presence. That can mean lower demand, and lower demand can lead to wider spreads between buy and sell prices.

This may impact how easily you can enter or exit a position, especially in larger amounts.

Returns depend on a manager's skill

As ETMFs are actively managed, the results rely on fund manager decisions. Strong calls can help performance, but poor ones can drag it down. Even experienced managers don’t outperform every year.

Fees may be higher

ETMFs often charge more than index ETFs, reflecting the cost of research and active decision-making. While some investors are comfortable paying for this, others may prefer lower-cost options. Check the management fee in the fund’s PDS to help you decide if an ETMF is for you.

While none of these risks are unique to ETMFs alone, they’re still important to weigh up when comparing fund types.

Making sense of ETMFs

Figuring out which type of fund suits you isn’t always simple. There’s a lot to weigh up: your goals, your comfort with risk, and how involved you want to be day-to-day. It’s completely normal to feel unsure, especially when the options sound so similar on the surface.

ETMFs can sit in that grey area between traditional managed funds and ETFs. For some, that mix of flexibility and professional oversight might feel just right. For others, it may not line up with how they prefer to invest — and that’s okay too.

What matters most is that the approach fits you . Your life, your plans, your values. That’s why taking time to explore, read the fine print, and ask questions is so worthwhile.

You don’t have to have it all figured out today. But understanding the choices available can help you feel more confident in the path you’re building. One step at a time, in a way that works for you.