Actively managed exchange traded funds only make up a fraction of the ETF universe, but activity is picking up as more mutual funds look at this segment as their way into the growing industry.
Over the past two months, Guggenheim Partners, Eaton Vance and Precidian Investments have received comments from the Securities and Exchange Commission to launch new types of actively managed ETFs, Bloomberg reports. [Fund Firms in No Hurry to Launch Active ETFs: Report]
“The next wave of ETF sponsors are all going to be mutual-fund companies,” Reggie Browne, head of ETF trading at Cantor Fitzgerald LP, said in the article. “This is just the tip of the iceberg in terms of the entrance of such strategies.”
Actively managed ETFs enjoy some of the efficient and cost-saving aspects found in the ETF structure, but instead of passively tracking an underlying index, an active ETF’s holdings are selected by a fund manager.
Many money managers have been loath to introduce an active ETF due to daily transparency rules, which would make it easier for competitors and other traders to anticipate or copy the ETF’s strategy. [Eaton Vance’s New ETF Structure Could be a Game Changer]
T. Rowe Price, BlackRock, State Street Global Advisors and Vanguard have offered new proposals to the SEC, seeking to avoid the daily disclosure of holdings in a type of new non-transparent ETF structure. Eaton Vance also filed for a non-transparent exchange traded managed fund, or ETMF, structure. [Non-Transparent Active ETFs are not a Slam-Dunk]