However, the fee cut may make sense for smaller hedge funds as the ETF structure could help asset growth.
“It’s often the managers who are less well-known or struggling to attract assets,” John Shearman, chief executive officer at IV Lions LLC, said in the article. “Some of these managers are trying to grow their business but struggling to compete in a hedge fund market that’s increasingly dominated by larger funds,” so they move to mutual funds or ETFs.
Many asset managers, though, are loath to enter to the active ETF space as daily transparency requirements would reveal their secret sauce. Nevertheless, the Securities and Exchange Commission is looking over some proposed nontransparent ETF structures from BlackRock, State Street, and Eaton Vance, among others. [NYSE Pushes to List Nontransparent ETFs]
For more information on the ETF industry, visit our current affairs category.
Max Chen contributed to this article.