Eaton Vance (NYSE: EV) said Tuesday evening that the Securities and Exchange Commission has granted the asset manager exemptive relief for exchange-traded managed funds (ETMFs), a type of exchange traded product that does not disclose its holdings on a daily basis as most passively managed ETFs do.
The news, announced after the close of U.S. markets Tuesday, grants “Eaton Vance and related parties an exemption from certain provisions of the Investment Company Act of 1940, as amended, to permit the offering of exchange-traded managed funds,” the Boston-based company said in a statement.
The exemptive relief order applies to the 18 ETMFs Eaton Vance plans to issue under the NextShares brand. Eaton Vance won approval to list ETMFs a month ago, barely more than two weeks after the SEC rejected applications for non-transparent actively managed exchange traded funds by Precidian ETFs Trust and Spruce ETF Trust, a unit of BlackRock (NYSE: BLK), dealing a blow to issuers looking to market ETFs that do not reveal their holdings on a daily basis. [SEC Rejects Two Applications for Active Non-Transparent ETFs]
The sticking point for the SEC with the Precidian and BlackRock products was the proposed fashion in which those would have traded, if they had come to life. “The difference in Eaton Vance’s fund structure appears to be in the way fund shares will trade, which was a concern in the other company filings,” reports Kirsten Grind for the Wall Street Journal, citing Eaton Vance.
Eaton Vance’s ETMFs would allow for a scenario 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 Wins Approval for ETMFs]
Last month, the SEC granted the NASDAQ Stock Market approval to list Eaton Vance’s ETMFs.
“Because NextShares will provide market makers with opportunities to earn reliable, low-risk profits without intraday hedging of their fund positions, NextShares can be expected to trade at prices that are consistently close to NAV in the absence of daily portfolio holdings disclosure. Because the trading cost to buy and sell NextShares (premium or discount to NAV) is always explicitly stated, NextShares will provide investors with transparency of entry and exit costs unparalleled among exchange-traded products,” said Eaton Vance at the time the NASDAQ news was announced.
Eaton Vance and its affiliates managed $297.7 billion in assets as of October 31, 2014, according to Tuesday’s statement.
ETF Trends editorial team contributed to this post.