“At this stage, there is limited awareness of the product and investors are not currently asking us to trade ETMFs when they become available,” a Fidelity spokesman told Reuters.
ETMFs, which will be launched under the NextShares brand, will combine some of the best features of ETFs and traditional actively managed open-end mutual funds. [ETMFs: A Cost-Efficient Alternative to Active Funds]
ETMFs are a new concept that marry the liquidity and tax efficiencies that have attracted investors to ETFs with active investment strategies, while maintaining the confidentiality of current portfolio trading information. However, it is important to note that ETMFs are not ETFs. The new investment structure will trade on an exchange, and to achieve their non-transparent nature, the products will trade based on their net asset value, or utilize a so-called NAV-based trading. [New ETMFs Could Eat Away At Mutual Funds’ Market Share]
The new type of funds may be a better alternative to the old mutual fund structure. Faust pointed out that ETMFs will be cheaper, more tax efficient and better performing than traditional open-end funds.
Eaton Vance has also licensed the new fund structure to other money managers, including Gabelli Investors and American Beacon Advisors. Eaton also expects to announce three more firms signing up in the weeks ahead. [American Beacon Will Partner With Eaton Vance on ETMFs]
For more information on exchange traded managed funds, visit our ETMFs category.