Actively managed exchange traded funds (ETFs) are just about here, as the Securities and Exchange Commission (SEC) granted exemptive relief to PowerShares, the first fund provider to receive it.

And PowerShares President Bruce Bonds believes that they’ll catch on with investors. There has been criticism of actively managed funds - they defeat the purpose of ETFs, they might not be as cost-effective as ETFs, and so on. But Bonds says that when investors finally sit down to compare actively managed funds with mutual funds, the transparency of the active ETFs, their liquidity and tax efficiency will ultimately win them over.

Will they someday take the place of mutual funds? Not quite, Bonds
says, but he believes that they will certainly give mutual funds a run
for their money. Mutual funds will continue to pull in assets, but ETFs
will remain a strong challenger.

The funds may or may not change their holdings each day, depending
on what the markets are doing. Whether they do or not, whatever
holdings there are will be disclosed each evening. Bonds says this is
an effort to preserve transparency, and was a condition of the SEC’s
granting of the relief. By disclosing holdings at the end of the day,
any possible front-running that might take place will be discouraged.

The four funds are:

• PowerShares Active AlphaQ Fund: seeks to provide long-term
  capital appreciation by investing in a portfolio of 50 Nasdaq-listed
  securities. It’s designed to beat the Nasdaq 100 benchmark.

• PowerShares Active Alpha MultiCap Fund: Designed to achieve
  returns in excess of the S&P 500 with a portfolio of 50 securities.

• PowerShares Active Mega-Cap Fund: Seeks to primarily invest in mega-caps and outperform its benchmark, the Russell Top 200.

• PowerShares Active Low Duration Fund: Invests in a portfolio of
  U.S. government and corporate bonds, and seeks to outperform its
  benchmark, the Lehman Brothers 1-3 Year US Treasury Index.

Now that they’ve gotten the go-ahead, the waiting game begins. Bonds says that PowerShares is aiming for an April launch.

Keep an eye out. This new breed of ETF has been long-awaited, and it’s just the beginning. Are investors going to bite?