The Dawn of Active Nontransparent ETFs

Actively managed mutual funds face serious headwinds, but new ETF products could create an opening for fast-moving asset managers.

As passive ETFs continue to grab mutual fund outflows, it’s no surprise asset managers are looking for ways to stem the tide. Recently the SEC approved the ActiveShares ETF, an actively managed nontransparent product that combines the flexibility of active management with the liquidity and tax advantages of ETFs. Although these new products are compelling, many asset managers wonder: Is the market ready? Broadridge conducted a study that provides insight into financial advisor (FA) perceptions of active nontransparent ETFs. Although FAs are not widely familiar with these new products, they express enthusiasm when they are informed. Asset managers looking to capitalize will need to leverage brand equity, accelerate new product rollouts and prioritize advisor education.