Precidian Investments has just received approval on its filing for non-transparent actively managed ETFs. The firm writes that its ActiveShares structure is an enhanced version of an ETF with a blind trust and supporting processes.
While an ActiveShares portfolio is not transparent to investors, each fund will publish a verified intraday indicative value every second, as opposed to ETFs which currently quote net asset values to the marketplace every 15 seconds.
The ActiveShares funds will have AP representatives, known as trusted agents, that will provide data on portfolio holdings and use confidential accounts to do the creations and redemptions for the authorised participants.
“These features will result in a seamless addition to the ETF landscape providing significant benefits to investors in reduced fees and tax advantages,” says Precidian CEO Daniel McCabe, adding, “For this reason, the support of large, established broker-dealers has already materialised and will continue to grow.”
Precidian cites advantages to investors in the form of lower costs and greater efficiency, to active managers in terms of flexibility and tax efficiency, and to markets in terms of diversifying the ETF market, among other benefits.
Commenting on Twitter, Nutmeg’s James McManus says: “An inevitable development but we continue to favour daily disclosure for ETFs. Could this be the tipping point for active managers to use the ETF wrapper and allow investors to benefit from a secondary market?”