Exchange traded fund (ETF) providers are stepping closer to putting together the first truly actively managed fund. Several firms have filed for active ETFs, and now the SEC is starting to come back with answers, reports Investor’s Business Daily. When a firm wants to issue ETF shares, they have to apply for permission with the SEC (otherwise known as exemptive relief).

The most basic ETFs follow indexes such as the S&P 500. A requirement of an ETF is that there be no actual stock picking. With the creation of more sophisticated indexes, the line between following an index and picking stocks has blurred.

Providers that have filed include Firsthand Capital, Vanguard, and PowerShares. Issues standing in the way of their approval are transparency and tax treatment, both advantages of holding part of an ETF. Providers are trying to keep these important factors while picking stocks and going in another direction.

Meanwhile, the race is still on to capture the actively managed segment of the ETF market. It ain’t over ’til the SEC gives the go-ahead.

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