The elusive goal of bringing an actively-managed exchange traded fund (ETF) to market is still a futuristic ideal, but six managers believe they have the formula. Raquel Pichardo for Investment News says that Vanguard, and Bear Stearns have filed proposals for an actively-managed ETF. Meanwhile, Firsthand Capital Management, Managed ETFs, AER Advisors, and XShares have filed for exemptive relief to offer these funds. Managers who want to offer these ETFs want to keep the benefits associated with passively managed ETFs while outperforming the market with active management.

However, the managers have faced many regulatory hurdles, the biggest one being transparency. Managers worry that full transparency of their trades will betray their investment processes and open the door for front-runners. For some managers, the answer to this problem is to have lag time between when a transaction is executed and when it is reported. Others think that they can manage daily reports; passive ETF managers report holdings daily.