Blue Tractor Group, LLC, an aspiring issuer of exchange traded funds, said Monday it has filed a third amended and restated application with the Securities and Exchange Commission (SEC) for its unique ETF structure known as the Shielded Alpha ETF.
“As described in the Application, a Shielded Alpha ETF would permit active fund management but unlike transparent actively managed ETFs, does not require full portfolio disclosure on a daily basis in order to facilitate pricing, hedging and arbitrage,” according to a statement issued by Blue Tractor. “Consequently, by using the Shielded Alpha solution active managers could issue actively managed ETFs while still fully obscuring their proprietary alpha generation strategy from the market.”
“Blue Tractor’s proprietary algorithms facilitate structuring of an actively managed exchange traded fund where the fund manager wishes to shield the alpha generation strategy from the market,” according to the company’s web site.
Several well-known asset managers are seeking approvals from U.S. regulators to list non-transparent ETFs. The vast majority of traditional, passive ETFs disclose holdings on a daily basis.
There have been a handful of so-called non-transparent, ETF-like petitions set to SEC over recent years. For instance, Eaton Vance’s NextShares suite of exchange traded managed funds, or ETMFs, have already received SEC approval. Other structures, such as those from Precidian Investments, BlackRock, T. Rowe Price and Capital Group, are still waiting on regulatory approval..”
“We have spent months dialoguing with authorized participant firms and exchange market makers, leading custodial banks and distributors and asset managers and believe the amended structure as described in our Application successfully addresses the needs of investors and issuers for a product that can deliver the attributes of active management with the cost and tax efficiencies of an ETF wrapper,” said Blue Tractor founder Terry Norman in the statement.
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