Actively managed exchange traded funds (ETFs) have been the talk of the town, however, assets will take time to gather and success will not happen overnight.

The Securities and Exchange Commission (SEC) is closer than ever to approving the launch of active ETFs which would not track a set index. The funds, which have been in the approval process for years, have finally cleared some hurdles and are waiting to be cleared for liftoff, reports John Spence for MarketWatch.

At first launch, active ETFs will be running without a track record, without active managers who are known quantities with advisors and investors.

Active ETFs are a different breed, and they will not track a set index, so investors will be left to put their faith in the managers’ stock-picking skills. These new funds will be starting from scratch, and they will have to work to build trust and garner assets.

PowerShares President Bruce Bond believes that once investors sit down and compare active ETFs with mutual funds, investors will be won over by their transparency (holdings will be disclosed once a day), low cost, tax efficiency and liquidity.

Tags: Bond ETFs