There’s been talk of actively managed exchange-traded funds for nearly 10 years now, and six companies have either submitted filings or requests for regulatory relief with the Securities and Exchange Commission to offer such funds, Pensions & Investments reports.
Transparency has long been the stumbling block for ETFs, as investment advisors have feared that revealing holdings would enable front-running. Firsthand claims it can get around that problem by completing trades in a single day. That, said Firsthand Marketing Consultant Phil Mosakowski, won’t be a problem for liquid stocks. However, less liquid stocks could pose a problem, he admitted.
Vanguard believes it can get around the transparency issue by only providing a sampling of 50% to 75% of its bond holdings represented by similar securities with the same maturities, credit quality and yield.