Active ETFs Set to Support Industry Growth

According to the New York Stock Exchange, growth in the U.S. exchange traded fund market will likely be supported by actively managed ETFs. A bevy of providers are waiting for regulatory approval to introduce active ETFs.

“Our pipeline continues to be quite robust and we have new prospect issuers coming to us with a high frequency,” Laura Morrison, vice-president of global index and ETFs at NYSE said, on IFA Online. [Active ETFs Seen Hitting $1 Trillion Within a Decade]

Many of the new players are interested in listing actively managed ETFs. Well-established companies such as JP Morgan, Dreyfus, Alliance Berstein, and State Street are in the process of an active ETF launch as well, reports Claire Dickinson for IFA Online.  [Mutual Fund or ETF, It’s Still Just Investing]

“There is heightened interest in the active transparent product type. We only have 41 listed on our exchange now, there is a decent number of new pending active ETF issuers that we are speaking with,” Morrison said.

Another area within actively managed ETFs that is taking shape is the  non-transparent actively managed fund. This would require the fund to disclose holdings once per day, at the end of the trading session, similar to a mutual fund. BlackRock recently made this request in a filing. [BlackRock Files to Launch Active ETFs]

This request dodges one of the main hold-ups in the proliferation of active management with ETFs. The requirement of full portfolio disclosure with actively managed ETFs could lead to “front running.” Many providers and managers are gun-shy to launch an actively managed ETF until this issue can be resolved.

Some of the most successful active ETFs trading are Pimco Enhanced Short Maturity Strategy Fund (NYSEArca: MINT) with $1.44 billion in assets under management, and the WisdomTree Dreyfus Emerging Currency Fund (NYSEArca: CEW) with $574 million in assets.

Tisha Guerrero contributed to this article.

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