The new fund will charge 0.79%, compared with the average 1.4% fee for a stock mutual fund.
Actively managed ETFs are still finding their way – investors need to see a track record. The market has rallied as of late, but will it be enough for them to regain their confidence and put their trust in an active manager? Thomas feels that more money managers will be willing to take the chance in order to boost their dwindling assets.
One concern on the part of active ETF providers is that of “front running” – trading ahead of fund managers. Grail isn’t as concerned with the issue because there are three firms dividing up the Grail ETF portfolio, making the activity difficult for front runners to keep tabs.
Anand notes one caveat: the ETF’s managers can buy or sell stocks for their other clients in separate accounts and mutual funds, before they trade for the ETF. This means that the clients could potentially get a better price for a stock they buy than the ETF would.
Other companies are in registration to launch active ETFs, as well, including Pacific Investment Management Co. (PIMCO). Meanwhile, Grail has more active funds in registration.