Active ETF Providers Drop Derivatives | ETF Trends

In response to the Securities and Exchange Commission’s (SEC) investigation of the use of derivatives, more exchange traded fund (ETF) providers are agreeing to nix their use in forthcoming actively managed funds.

In an effort to get their funds to market, several providers  have filed amended documents with the SEC to state that their products won’t use derivatives, in an effort to bring their actively managed ETFs to market. Jackie Noblett for Ignites reports that if the providers chose not to use derivatives in their funds, their requests would be approved more quickly. [How Active ETF Providers Cope With Transparency.]

Providers that have so far agreed to this include AdvisorShares, Guggenheim Funds and Van Eck Global. According to Jessica Toonkel for Investment News, the SEC said in March that it was reviewing whether additional investor protections were needed pertaining to the use of derivatives by mutual funds, ETFs and other types of investments. [ETF Providers Say No to Derivatives.]

Derivatives have been under scrutiny with the SEC and are a concern within the investment community. When the SEC is going to come out with something on this is the $64,000 question. A lot of people are frustrated because it’s holding up product development.

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.