Major fund providers are lining up to offer an exchange traded fund (ETF) that is actively managed. The idea is to gain the most market share, for those who are able to garner assets first. So what’s the hold up?
Ian Salisbury for The Wall Street Journal explains that the holdup is mostly with regulators, who have yet to approve many of the new products. While approval of an ETF by the Securities and Exchange Commission often takes months or even years, there are indications that the caution may be related to questions about the use of derivatives or last spring’s “flash crash.” [Actively Managed ETFs Ready for Their Close-Up.]
The SEC is trying to make certain that the funds are appropriate and that they are trading in line with rules. [Actively Managed ETFs Primed for Take Off.]
Nevertheless, Northern Trust is making another go at the ETF industry by requesting permission to market actively managed ETFs, supplementing an earlier filing it made last spring to market index-based ETFs. Oliver Ludwig for Index Universe reports that Northern Trust’s decision in its latest filing to nix derivatives could grease the wheels on a launch.
In the latest filing, it also said that in an effort to preserve transparency, its initial fund will provide market participants information regarding change in portfolio composition “T+1,” or a day after the trade.
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.