Eaton Vance Files Amended Application for ETMFs Product
January 23rd, 2014 at 4:08pm by Tom Lydon
Eaton Vance’s (NYSE: EV) Eaton Vance Asset Management said it has filed a second amended application seeking exemptive relief to permit the offering of exchange-traded managed funds.
The Securities and Exchange Commission filing was originally made in March 2013 and amended in September 2013. Eaton Vance is looking to launch a series of exchange-traded managed funds (ETMFs) that mirror some of the firm’s existing mutual funds.
“The filing of a second amended exemptive application is another step forward in the process of seeking regulatory approval for ETMFs,” said Stephen W. Clarke, President of Navigate, in a statement. “We are pleased by our continuing regulatory progress and encouraged by the broad-based interest in ETMFs expressed by fund sponsors, market makers, broker-dealers and the investors they represent.”
ETMFs are new concept that looks to marry the liquidity and tax efficiencies that have attracted investors to ETFs with active investment strategies, while maintaining the confidentiality of current portfolio trading information, according to the statement.
Active fund managers have either introduced their own actively managed ETFs or, in a trend that is on the rise, partnered with established ETF sponsors. [SSgA, MFS Partner on Active ETFs]
However, some “have to date largely avoided introducing their leading strategies as transparent ETFs because the required daily holdings disclosures can facilitate front-running of portfolio trades and enable other investors to replicate the fund’s portfolio positioning and exploit its research insights. By removing the requirement for daily portfolio transparency, ETMFs can potentially enable investors to access a broad range of proven active strategies through a vehicle that provides the investor benefits of an exchange-traded fund,” according to Eaton Vance.
The ETF industry is still dominated by passive, index-based ETFs. There are 74 actively managed U.S.-listed ETFs on the market with $14.9 billion in assets, compared to the overall 1,548 ETFs with $1.7 trillion in assets.
Other ETF issuers and mutual funds such as T.Rowe Price (NasdaqGM: TROW) have shown interest in a nontransparent ETF structure for actively managed strategies. [Precidian Highlights Nontransparent ETF Plans]
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.