The new type of ETF funds, which are often referred to as “semi-transparent,” are an investment vehicle that allows active asset managers to capitalize on the benefits of the ETF structure, including more-liquid trading and tax advantages, while keeping their strategy hidden to protect shareholders.
“We have been working closely with the SEC throughout the process of seeking exemptive relief and will continue to do so,” Greg Friedman, head of Fidelity ETF management and strategy, said in a statement to ETF Trends. “We are excited to receive notice of approval for our innovative strategy, which we believe is the best approach to active equity ETFs for our clients.”
T. Rowe Price, Natixis and Blue Tracker are the asset managers whose models were also approved today.
Until recently, transparency was the highest hurdle faced by most equity managers otherwise interested in capitalizing on investor interest in ETFs but they were concerned about the potential for front running. Some managers tackled the issue head on and created fully transparent, actively managed ETFs. Some bond strategies and MLPs enjoyed success, but many failed to gain traction in a market dominated by low cost index products.
Related: The Next Steps for Non-Transparent ETFs
Active managers who remained on the sidelines have now been given a boost by the recent Securities and Exchange Commission (SEC) approval of a new type of non-transparent actively-managed ETF that reduces the disclosure of portfolio holdings from a daily to a quarterly event. Precidian Investments was recently granted approval to license its ActiveShares actively-managed, non-transparent ETF structures.
For more ETF industry news, visit ETFtrends.com.
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