Grail has been waiting since September of last year for the SEC to approve its request for an exemption, reports John D’antona Jr. for Investment News. CEO William Thomas says he expects the exemption for transparent, actively managed equity ETFs to be granted.

Thomas says he plans to work with banks and other financial institutions to create and market customized ETFs. The first will be large- and mid-cap growth and value funds. Introduced later might be international equities, small-cap stocks and fixed income.

Meanwhile, the first actively managed ETF, Bear Stearns Current Yield (YYY) has announced that it is closing. Its shares will be liquidated on or about Oct. 1.

After J.P. Morgan rescued Bear Stearns in March, just before the fund launched, many wondered what it would mean for this ETF. With all the troubles that have hit the financial markets lately, it looks like this ETF didn’t stand a chance.

Once Grail’s funds are launched, they will join a small but growing list of other active ETFs, including four from PowerShares and eight currency funds from WisdomTree, which have been defined by the SEC as actively managed.

Pimco has also filed for a line of actively managed bond ETFs.

The first actively managed ETF, the Bear Stearns Current Yield (YYY), was actually a bond fund and launched on March 25. Its counterpart, PowerShares Active Low Duration (PLK) was released in mid-April. YYY is down 0.2% over the past month and PLK is up 1.3% over that same period. However, the future of these type of active ETFs has some question marks and challenges, as reported by Murray Coleman for IndexUniverse.

Based on the short existence of these funds, neither active bond ETF has pulled in big assets from investors. However, in fairness to these funds, there is no doubt that much of the slow response is because of a dismal investment environment overall. However, in the first three months of the PowerShares funds’ lives, the performance results have been promising.

But if the economy keeps slowing, these funds are more than likely to catch a bit of momentum. Even further, any increase in headline shocks could potentially create a unique opportunity for active bond ETFs in a time while interest rates are at somewhat of a low level.

However, active managers seem to outperform in times of great volatility in the market and investors search for yield, while they do not do as well when there is a flight to quality in bond markets.

In comparison to active mutual funds, active bond ETFs may be at a disadvantage being that mutual fund investors are more likely to pay higher fees to offset research costs. ETFs on the other hand, are competing in a much cheaper marketplace and active bond ETF managers will have difficulty charging as much as they do under mutual funds.

Jeffery Ptak, a Morningstar analyst, realizes that along with costs, a key question facing active bond ETFs, and actively managed ETFs in general, is how do they broaden their scope from very liquid market segments in a workable manner? A question that has yet to be resolved.

Murray Coleman for IndexUniverse acknowledges that it has been a short period of time and that three months cannot really be viewed as a valid data set.

However, it’s encouraging when it comes to actively managed funds, because many questions about them centered around how they were going to do in the absence of back-tested data. But these positive first three months could draw investors toward active ETFs.

Many investors see a few advantages for actively managed ETFs. For example, the PowerShares Active Alpha Multi-Cap Portfolio (PQZ), selects from a pool of the 2,000 largest stocks by market-cap size. This allows for flexibility in making updates of up to three stocks per week. This gives an advantage over indexing funds which are essentially stuck in a group of stocks.

Through Aug. 1, PQZ had lost only 5.9% over the past three months, while the average mulit-cap core mutual fund lost 9.2% over this same period. David O’Leary, chief investment officer at AER Advisors, says their ability to eliminate lagging stocks when needed has been key this year.

Some actively managed ETFs include:

• PowerShares Active Alpha Multi-Cap (PQZ): down 6.9% over the past month; $7 million assets
• Bear Stearns Current Yield (YYY), up .2% over the past month; $51 million assets

WisdomTree has also launched four new currency ETFs that are classified as actively managed by the Securities and Exchange Commission (SEC). The funds seek to earn current income reflective of money market rates available to U.S. investors.

These four funds are:

• WisdomTree Dreyfus Chinese Yuan Fund (CYB), down 1.5% over the past month; $219 million assets
• WisdomTree Dreyfus Indian Rupee Fund (ICN), up 5.8% over the past month; $10 million assets
• WisdomTree Dreyfus Brazilian Real Fund (BZF), up 3.0% over the past month; $107 million assets
• WisdomTree Dreyfus Euro Fund (EU), down 1.4% over the past month; $21 million assets