Under NAV-based trading, a process similar to how existing transactions in mutual fund shares take place, investors would be able to send in orders intra-day based on a proxy price that represents the NAV, which is calculated at 4pm of each day. However, this will concentrate most of the day’s liquidity around the final end-of-day price.
“Active managers have until now been a bit skittish about having to show their hand on a daily basis,” Ben Johnson, director of passive fund research at Morningstar, said in the article. “This structure would serve to alleviate concerns about daily portfolio disclosure.”
Eaton Vance believes ETMFs will be a large success, and the firm is already trying to license the technology to other active fund providers through its Naviage Fund Solutions subsidiary.
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Max Chen contributed to this article.