While active ETFs still represent less than 1% of ETF assets in the U.S., they're poised for more growth in coming years.
American Funds, one of the largest issuers of actively managed mutual funds, is the latest fund giant to file plans with the SEC to possibly list non-transparent actively managed ETFs.
What does their planned entry into the active ETF space say about how fund providers will adjust their operations and distribution strategy?
"I would expect fund providers to continue looking at offering active ETFs," says Noah Hamman, chief executive officer of AdvisorShares.
It remains to be seen how the SEC will handle active ETFs, placing uncertainty around operations and distribution of such products, Hamman says. While Eaton Vance waits for approval to create "exchange traded managed funds" that clone mutual funds without disclosure, NYSE listings have daily disclosure.
"Until the SEC has a plan to deal with non-daily disclosure for equity funds nothing will change," Jeff Tjornehoj, a Lipper analyst, says.
Some of the largest asset managers and mutual fund companies have previously filed plans for active non-transparent ETFs, including State Street, BlackRock, Eaton Vance, T. Rowe Price and Precidian Investments. BlackRock and State Street are the two largest U.S. ETF issuers. Eaton Vance Management has also filed with the SEC to offer "exchange traded managed funds" or ETMFs that would not disclose holdings daily.
