Kara Stein, one of five commissioners at the Securities and Exchange Commission, argues that ETMFs could potentially “break through the ceiling” that kept fund sponsors from launching actively managed ETFs, reports Peter Ortiz for the Financial Times.
There are currently 122 actively managed U.S.-listed ETFs on the market with $18.2 billion in assets under management. Many money managers have been loath to launch an active ETF due to the investment vehicle’s transparent nature and potential for front running.
The Securities and Exchange Commission approved Eaton Vance’s new ETMF investment vehicle earlier last month. The first suite of NextShares ETMFs is expected to come to market at around springtime. All but one of the 18 expected ETMF offerings will be an adaption of existing mutual fund strategies. [Eaton Vance Lands Approval for Non-Transparent ETF]
Nevertheless, the some at the SEC remain skeptical about the new non-transparent investment vehicle. For instance, Stein argues that there remains some concerns, especially if there are not enough authorized participants to maintain efficient price discovery and liquidity. The concerns are warranted as we move into a new investment frontier.
For more information on the exchange traded managed funds, visit our ETMFs category.
Max Chen contributed to this article.