2013 could be the year that actively managed exchange traded funds finally take off. Two major catalysts are about to come together to get this sector off the ground early on this year.
“Actively managed ETFs have faced a few big challenges. For starters, many active managers were skeptical of their transparency — other investors would be able to see every move they make, almost in real time. Plus, many active managers use derivatives to control the risk and cash flow of their funds, a practice that the Securities and Exchange Commission banned for two and a half years,” Brendan Conway wrote for Barron’s.
A few developments are taking place that should have appositive impact upon this area of the market. First, the Securities and Exchange Commission has lifted the moratorium on derivatives use in ETFs. Secondly, Fidelity Investments has filed for approval to launch an actively managed corporate bond ETF. This fund is expected to take the actively managed ETF sector to the next level. [Fidelity Files to Launch Active ETFs]
Furthermore, at the start of 2013, T.Rowe Price had gained approval to launch their own line of active ETFs, reports Conway. Franklin Templeton has also filed with The Sec to launch such products, however, Fidelity has all eyes on them.