Investment management firm American Century Companies could roll out its own suite of actively managed, semi-transparent ETFs after coming to an agreement with Precidian Investments to license the firm’s ActiveShares methodology.
Precedian’s patented ActiveShares fund structure would allow American Century to bypass its own regulatory exemptive relief process to launch its time-tested actively managed investment strategies through the ETF investment vehicle without the daily holdings disclosure requirements of fully transparent ETFs, according to a press release.
The ActiveShares structure is still going through the regulatory process and has yet to receive exemptive relief from the Securities and Exchange Commission.
ETFs are known for their transparent nature, which helps facilitate its innate creation and redemption process and provides an efficient trading tool. However, a number of would-be active ETF managers are loath to reveal their secret sauce under the fully transparent nature of the ETF structure, so more are seeking alternative investment wrappers that would provide the same efficiency as ETFs but without the full transparency.
“As we build out American Century’s ETF product suite, our long-term plan is to leverage our established active-management capabilities to bring clients our investment strategies in an ETF format, which aligns with certain investors’ preferences,” said Edward Rosenberg, senior vice president and head of ETFs for American Century. “While waiting for SEC approval of the ActiveShares methodology, we are proceeding with plans to launch other transparent ETFs that are informed by decades of experience and apply our unique insights to solve common investment problems and help investors achieve their goals.”
Since appointing Rosenberg to American Century’s top ETF post back in June, the investment management firm has been crafting the foundation for its entry into ETFs. In October, the firm filed registration statements on two transparent ETFs, including an index-based value ETF and an actively-managed diversified corporate bond ETF. The firm anticipates a mid-January effective date for both funds if nothing goes wrong.
For more information on the ETF industry, visit our current affairs category.