“Navigate Fund Solutions and Eaton Vance expect ETMFs to reliably generate 50 basis points or more of improved annual returns versus similar mutual funds across a range of strategies, reflecting lower operating expenses and reduced flow-related trading costs in the ETMF structure,” Stephen W. Clarke, President of Navigate Fund Solutions, said in a note. “Through use of in-kind redemptions, ETMFs can also achieve levels of tax efficiency similar to ETFs.”
Under the ETF structure, funds utilize a creation/redemption process to execute “in-kind” transactions that would exchange a basket of underlying component holdings for shares of ETFs, instead of selling out of a position and incurring a taxable event. [Creations & Redemptions]
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Max Chen contributed to this article.
Story updated to correct name of proposed Eaton Vance products.