The creation of an actively managed exchange traded fund (ETF) could change the path of many traditional asset managers. This would allow the portfolio managers to have a hand in the securities pickings. Managed ETFs LLC has an application filed with the SEC for an active ETF, reports Jen Ryan of The Street.com. An actively managed ETF would be a better product in a traditional active money management business, where managers are trying to create a portfolio that will beat a benchmark versus the current ETFs which seek to replicate indexes. Once this happens, the mutual fund industry may start to show interest in ETFs.
An active ETF will be structurally different, and could be complicated, but some industry insiders think the transparency of the holdings will be lost. Regardless, mutual fund companies will look to get involved with ETFs either through the creation of active ETFs or by buying an ETF company.
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.