The idea is to keep ETF intraday pricing fair for all market participants while moving disclosure to quarterly from daily, the current requirement for active ETFs. The filing has yet been officially noticed by the SEC.
Another step toward bringing higher asset levels to active ETFs involves the ongoing reform for the $2.65 trillion money market mutual funds. Weinberg reports that Onur Erzan, a New York-based partner at McKinsey & Co. and lead author of “The Second Act Begins for ETFs,” sees the discussion of floating net asset value for money-market funds as a half-step to ETF conversion and intraday liquidity.
“There will be focused opportunities where active ETFs make sense,” said Shundrawn Thomas, Chicago-based managing director of Northern Trust’s ETF group, FlexShares, but issuers will have to “really clarify the value proposition.” Several advantages of passive ETFs, such as transparency, liquidity and total cost of ownership, do not necessarily translate to active strategies.
Tisha Guerrero contributed to this article.