The race is on for exchange traded fund (ETF) providers to capture market share in the active management space. T. Rowe Price is the latest name to take its place at the starting line.
In a filling with the SEC to address comments about the funds, T. Rowe appears to be putting the ducks in a row to become one of the first active ETF launches of the new year.
Jessica Toonkel for Investment News reports that actively managed ETFs largely have struggled to take off, largely because of their relative scarcity. [What’s Ahead For Active ETFs In 2011?]
The horse has to come out of the gate first; some firms’ filings have been in SEC limbo for two years. The increased overall interest in ETFs — coupled with the full pipeline of filings with the SEC — we can expect that more active ETFs will get approval and hit the market this year. [Alliance Says No To Derivatives In ETFs.]
T. Rowe’s entry into the space should help goose things along, too. They have a great mutual fund name and a strong brand. They’re now realizing that they missed the ETF boat and they’re clearly trying to fast-track new offerings. It’s a good strategic move.
Another issue tying up the active ETF space is the SEC’s moratorium on approving active ETFs that use derivatives. In the end, they will find that derivatives have a place in actively managed ETFs, if managed appropriately. Expect the SEC to come out with something on this by the end of the second quarter.
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. 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.