Consequently, the transparency issue among actively managed strategies has led to the recent efforts of Precidian Investments for a non-transparent ETF offering. Precidian plans to allow issuers to create a blind trust and redeem active ETF shares to protect portfolio holdings from the market. However, the SEC has so far rejected the plan.
The SEC, though, has approved Eaton Vance’s proprietary exchange traded managed fund, a net asset value-based fund methodology. The ETMFs will combine some of the best features of ETFs and traditional actively managed open-end mutual funds. [SEC Again Rejects Precidian Non-Transparent ETFs, Solidifying Eaton Vance Lead]
On the other hand, some have even called for greater transparency and changes to the IIV to improve pricing. For instance, Georgetown University professor and market structure expert James Angel suggests requiring firms to publish separate IIVs for the bid/ask prices, raising the frequency of IIV publications and updating the data on a firm’s site. BlackRock has also argued for improved transparency and improved intraday indicative valuations as a way to better facilitate market participation and liquidity.
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.