Some analysts are calling for assets in actively managed exchange traded funds to hit $1 trillion within a decade. However, one persistent challenge for active ETFs is providing the necessary disclosure for the fund to trade properly without tipping the portfolio manager’s hand.
One idea proposed recently is a hybrid structure that combines features of ETFs and traditional mutual funds, according to a report. [Index ETFs Still Rule Over Active Funds]
The mutual-fund industry wants to develop a hybrid actively-managed structure that will offer the efficiency of ETFs but protect the confidentiality of managers’ trades, new methods of mitigating volatility, absolute-return products and lower costs, reports Daisy Maxey for Dow Jones Newswires. [Surveying Active ETFs]
Tom Faust, chairman and chief executive at Eaton Vance (NYSE: EV), believes that hybrid products will fill the gap between open-end mutual funds and ETFs over the next three to eight years. While Eaton Vance has not planned a hybrid product, the company is discussing the possibility with the Securities and Exchange Commission. [Active ETFs Seen Hitting $1 Trillion]
“The SEC is appropriately cautious,” Faust said. Eaton Vance, though, is confident that the hybrid structure will be approved, according to the Dow Jones report.