More recently, money managers like State Street (NYSE: STT), BlackRock (NYSE: BLK), Eaton Vance (NYSE: EV), T. Rowe Price (NYSE: TROW) and Precidian Investments have pushed for non-transparent offerings to help protect trade executions on day-to-day active management in an ETF wrapper. [Precidian Provides Blueprint for Nontransparent Active ETF]
“Should one or more of these proposed structures get the go-ahead from the SEC, we anticipate that the active ETF floodgates could open, and far more traditional fund managers may subsequently seek to roll out their strategies in relatively low-cost, tax-efficient ETF wrappers,” Goldsborough added.
The fund managers have proposed two different types of non-transparent active ETFs. One involves a type of blind trust that would act as the vehicle for the ETF’s marekt maker or authorized participant to handle ETF creations and redemptions without disclosing daily holdings.
Alternatively, Eaton Vance has proposed a new type of exchange traded managed funds, or EMTFs, where market makers would buy or sell shares based on the so-called proxy price that represents the fund’s end-of-day net asset value, or “NAV-based” trading. [Eaton Vance Files Amended Application for ETMFs Product]
For more information on the active ETF space, visit our actively managed ETFs category.
Max Chen contributed to this article.