FEGE: A High-Performing Active ETF Disrupting Global Equity Investing

In an era where passive investing dominates global equity markets, the First Eagle Global Equity ETF (FEGE) stands out as a rare success story for active management. With a year-to-date return of 33.6% in 2025 and a one-year return matching this figure, FEGE has outpaced the MSCI World Index by over 12 percentage points during the same period. This performance places it in the top 20% of its Global Large-Stock Blend category, earning it a Morningstar performance grade of A. As passive strategies face structural challenges-such as fee compression and benchmark underperformance-FEGE's value-driven approach offers a compelling counterpoint, demonstrating how active equity strategies can thrive in a passive-dominated landscape.

A Value-First Investment Philosophy

FEGE's strategy is rooted in the principles of value investing, a discipline that has historically outperformed in volatile markets. The ETF targets companies with temporarily undervalued assets or those operating in out-of-favor industries, emphasizing persistent businesses with sound balance sheets and prudent management. Its four-step investment process includes:
1. Business model analysis to identify durable competitive advantages,
2. Financial recasting to strip away accounting noise and uncover true earnings,
3. Intrinsic value calculation using metrics like Enterprise Value to Asset Replacement Value and EV/EBIT, and
4. Margin of safety to mitigate downside risk according to its investment framework.

This rigorous framework has enabled FEGE to capitalize on market dislocations. For instance, its top holdings-Samsung Electronics Co., Ltd. and Becton, Dickinson and Company- reflect a focus on undervalued global leaders with strong long-term fundamentals. By prioritizing quality and patience, FEGE aligns with the core tenets of value investing while adapting to the liquidity and transparency advantages of the ETF structure.

Active ETFs Gain Momentum Amid Passive Dominance

While passive strategies have attracted $1 trillion in inflows since 2020, active ETFs are carving a niche for themselves. The U.S. active ETF market alone has surged from under $100 billion in 2018 to nearly $900 billion by November 2024, driven by demand for alpha generation and diversification. FEGE exemplifies this trend, with an expense ratio of 0.50%- slightly above the category average but justified by its performance. Its success is part of a broader shift: active ETFs now account for 8% of U.S. ETF assets and nearly half of net inflows in 2024, with projections suggesting their AUM could reach $4 trillion by 2030.

Regulatory changes in Europe and Ireland have further lowered barriers to active ETF innovation, enabling firms like First Eagle to launch vehicle-agnostic strategies that blend active management with ETF efficiency. This flexibility is critical in a market where investors increasingly seek customization and tax efficiency.

Expert Validation and Strategic Resilience

Third-party analyses underscore FEGE's potential. Morningstar's evaluation highlights the fund's robust investment process and alignment with investor interests, while Danelfin's AI model assigns it a "Strong Buy" rating, citing a 2.72% probability advantage over the ETF universe. Frank Riccio of First Eagle Investments notes that the ETF reflects the firm's commitment to active global value strategies, a philosophy honed over decades of managing mutual funds.

Despite its relatively new management team-averaging 0.95 years of tenure-FEGE benefits from First Eagle's institutional expertise in value investing. The firm's ability to adapt its long-standing strategies to the ETF format has resonated with advisors and high-net-worth investors seeking alternatives to passive beta.

The Barbell Dynamic: Passive Equity and Active Fixed Income

The broader industry is witnessing a "barbell" dynamic, where growth is concentrated in passive equity strategies and active fixed-income approaches. While active equity strategies face outflows due to fee pressures and benchmark underperformance, FEGE's outperformance suggests that skillful active management can still deliver value. Its 34.20% return as of January 2026-versus the MSCI World Index's 21.09%-demonstrates how a disciplined value approach can exploit market inefficiencies.

This divergence is likely to persist as investors seek solutions to mitigate concentration risks in passive portfolios. FEGE's focus on global equities, combined with its margin-of-safety discipline, positions it to thrive in environments where market sentiment shifts rapidly.

Conclusion

FEGE represents a paradigm shift in active equity investing, combining the rigor of value investing with the accessibility of ETFs. In a market where passive strategies dominate, its ability to generate alpha through disciplined, bottom-up analysis offers a compelling alternative. As active ETFs continue to grow-bolstered by regulatory tailwinds and investor demand for customization-FEGE's success underscores the enduring relevance of active management in a passive-dominated world. For investors seeking to diversify their portfolios and capture undervalued opportunities, FEGE is a testament to the power of strategic innovation.