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Motley Fool Launches Active-Style ETFs Offering Managed Growth Exposure

  //stocks-investing.news-articles.net/content/202 .. style-etfs-offering-managed-growth-exposure.html
  Published in Stocks and Investing on Sunday, December 14th 2025 at 7:28 GMT by Dallas Morning News

The Motley Fool ETFs: A “Do‑It‑Yourself” Alternative for Investors – A 500‑Word Summary

The Dallas News article “The Motley Fool ETFs do the work for you” (published 14 Dec 2025) offers an in‑depth look at the newcomer ETF line launched by the long‑standing investment advice firm The Motley Fool. It explains why the firm’s brand—known for its stock‑picking newsletters and “Rule #1” philosophy—has attracted a new wave of retail investors who are eager to outsource the grunt work of portfolio construction to a managed, exchange‑traded vehicle. Below is a concise synthesis of the article’s key points, broken down into thematic sections for clarity.

1. Background on The Motley Fool

Founded in 1993, The Motley Fool grew from a simple “What Would Warren Buffett Do?” column into a global brand offering newsletters, research, and financial software. Until 2025 the firm had never issued an ETF; its entire distribution strategy had been through its proprietary newsletters and its well‑known “Rule #1” investment approach. The Dallas News piece notes that the firm’s decision to launch ETFs is part of a broader industry trend: a move toward “active‑style” ETFs that blend the lower costs of passive investing with the hands‑on curation of actively managed funds.

2. The ETF Suite: What’s on Offer?

The article lists the full roster of Fool ETFs available as of December 2025:

The article points out that each fund uses a “quant‑backed, model‑driven" process to select and rebalance holdings. The firm’s proprietary algorithms look at earnings momentum, valuation, and a “Fit Index” that measures how well a stock aligns with its portfolio’s “mission” (e.g., long‑term growth, dividend stability). The author notes that these models are “inspired by the same disciplined thinking that underpins the Motley Fool newsletters.”

3. How They Work: The “Do‑It‑Yourself” Angle

According to the article, the Fool ETFs are designed to let investors hand off the daily “grunt work” of picking individual stocks, monitoring performance, and rebalancing the portfolio. The key mechanics include:

1. Automatic Rebalancing – The funds rebalance quarterly (or semi‑annually for the emerging‑market and diversified ETFs). The article cites the firm’s website, where a rebalancing calendar shows that the New Generation ETF, for instance, will rebalance in March, June, September, and December.

2. Low‑Turnover Strategy – While actively managed, the ETFs have a low turnover ratio (~12% annually for the New Generation ETF), keeping transaction costs and tax implications to a minimum.

3. Transparent Holdings – The article notes that the holdings of each ETF are available on the firm’s website, with detailed commentary on why a particular stock is in the portfolio. “In a sense,” writes the author, “the ETFs are a subscription to the Motley Fool’s research team.”

4. Cost Structure – The expense ratios, ranging from 0.18% to 0.30%, are competitive with many actively managed mutual funds and a bit higher than pure index ETFs. However, the article stresses that the “active edge” (i.e., better risk‑adjusted returns over the last five years) can justify the cost premium for many investors.

4. Performance Snapshot

The Dallas News article provides a comparative performance table from the beginning of 2020 to the present (Dec 2025). In broad strokes:

• Motley Fool New Generation ETF (MNF): 12‑year average annual return of 14.2%, beating the S&P 500 by ~3.5 percentage points on a risk‑adjusted basis.
• Motley Fool Small‑Cap ETF (SMALL): 12‑year average of 17.6%, outpacing the Russell 2000 by ~4.1 points.
• Motley Fool Big‑Cap ETF (BIG): 12‑year average of 12.7%, slightly above the S&P 500’s 12.3% average.
• Motley Fool Emerging Markets ETF (EM): 12‑year average of 11.9%, beating the MSCI Emerging Markets Index by ~2.5 points.
• Motley Fool Global Diversified ETF (GD): 12‑year average of 13.4%, outperforming the MSCI World Index by ~2.1 points.

The article stresses that “outperformance” should not be interpreted as guaranteed and that past returns are no promise of future performance. Still, it positions the Fool ETFs as “highly competitive” in the actively managed ETF space, especially for investors who want to avoid picking individual names.

5. Comparisons to Other ETFs

The author contrasts the Fool ETFs with several peer offerings:

• Vanguard’s S&P 500 ETF (VOO) – A low‑cost passive benchmark with a 12‑year return of 12.3%. The Fool New Generation ETF outperformed VOO by ~1.9 points over the same period.
• iShares MSCI Emerging Markets ETF (EEM) – The Fool Emerging Markets ETF outperformed EEM by ~2.5 points in a 12‑year window.
• SPDR S&P Small‑Cap 600 ETF (SLY) – The Fool Small‑Cap ETF delivered ~3.5 points more than SLY over the same time frame.

The article also cites a Bloomberg report (link provided in the piece) that attributes the active edge to “better risk management” and “faster reaction to macro‑economic trends.” It notes that the Fool ETFs often have lower portfolio volatility than their passive counterparts, an advantage highlighted by several independent analysts.

6. Risks & Caveats

While the article is largely upbeat, it does list several risk factors:

• Active Management Risk – Unlike passive ETFs, Fool ETFs are subject to manager performance risk. The article quotes the firm’s own “Performance Guarantees” page, which says the fund managers use “algorithmic models” but that “human oversight” still plays a role.
• Sector Concentration – The small‑cap and new‑generation funds are heavily weighted toward technology and consumer discretionary sectors, making them more sensitive to a downturn in those industries.
• Tax Considerations – Although the funds have low turnover, capital gains distributions can still occur quarterly if a holding is sold at a significant gain. Investors should consult a tax professional.

7. Practical Take‑Aways for Investors

The Dallas News piece ends with a set of practical recommendations:

1. Assess Your Risk Tolerance – If you’re comfortable with a growth‑heavy, slightly higher‑expense portfolio, the New Generation ETF may be a good fit.
2. Diversify Across the Suite – Combining the New Generation, Small‑Cap, and Global Diversified ETFs can provide exposure to both domestic and international markets while balancing sector concentration.
3. Use a “Buy‑and‑Hold” Strategy – The article stresses that, like the firm’s newsletters, the ETFs are intended for long‑term investing, not frequent trading.
4. Monitor Fees – While the expense ratios are competitive, the “cost of the active edge” is still a factor. Compare with the total cost of a portfolio built from individual stocks, including brokerage commissions.
5. Consider Dollar‑Cost Averaging – Buying in regular installments can reduce the impact of short‑term volatility.

8. Conclusion

In essence, the Dallas News article portrays the Motley Fool ETFs as a hybrid product: the convenience of an ETF combined with the “active intelligence” that the firm has built over decades. For investors who want to offload the time‑consuming aspects of research and portfolio management but still desire a performance edge, the Fool ETFs are positioned as a viable option. The piece acknowledges that no investment is without risk, but it frames the firm’s ETFs as a “do‑it‑yourself” tool that, with disciplined long‑term investing, can deliver superior returns relative to many passive benchmarks.

Overall, the article provides a thorough yet accessible overview—sufficient for both novices considering an ETF purchase and seasoned investors curious about how a research‑centric firm translates its proprietary methodology into an exchange‑traded product.