Though the broader exchange traded fund (ETF) industry had a solid year, the majority of actively managed funds are still struggling to take off – if they’ve launched at all.
This year could be the turning point.
It’s not a matter of if, only, when, and which provider will be the one with the magic formula? Shishir Nigam for Active ETFs reports that there are a bevy of existing and new providers who have products lined up in the pipe, they’re armed with a strategy and are clearly ready to take on the actively managed ETF industry.
Some of the products waiting include:
- PIMCO Global Advantage Inflation-Linked Bond Fund: Inflation has been right near the top on the list of concerns that investors have going into 2011. As economic activity starts to recover, that’s when the velocity of money will pick up – leading to the big question of how that will affect inflation.
- AdvisorShares Active Bear ETF: This will be the first actively-managed ETF on the market to provide exposure to a short-only equity fund. The managers utilize a fundamental approach and actually look for firms with poor earnings quality, those likely to make downward revisions on estimates and those with aggressive accounting methods. This serves as a hedge when markets aren’t doing well.
- Market Vectors Active Africa ETF: Van Eck is another issuer that has been waiting to launch an active fund since November 2008. It was granted exemptive relief after a two-year wait in November of this year.
A few other things we’ve noticed:
- The industry’s first actively managed ETFs, courtesy of PowerShares, will have launched three years ago in February. That three-year mark is key for investors who want to see an established history before they entrust a manager, and it’s been commonly cited as a reason active ETFs haven’t caught on as much as they could. Will February be the tipping point?
- Look for more providers to swear off the use of derivatives in their funds in order to get the go-ahead to bring them to market.
- In 2011, look for some of those big names with funds in registration to finally get them trading. JP Morgan is one of those huge names.
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.