Actively managed ETFs and ETPs listed in the US gathered net inflows of USD6.10 billion during February, bringing year-to-date net inflows to USD12.30 billion. Assets invested in actively managed ETFs/ETPs finished the month up 2.0 per cent, from USD163.61 billion at the end of January to a new record of USD166.84 billion, according to ETFGI’s February 2020 Active ETFs and ETPs industry landscape insights report, an annual paid-for research subscription service.
Twelve years ago, on 18 March the first active ETF was listed in the US – the Bear Stearns Current Yield Fund (AMEX: YYY). In the US all ETFs are required to disclose their holdings on a daily basis. The move toward non-transparent ETFs, has been in the works by issuers for over 11 years. The movement is mostly being driven by product providers/issuers rather than demand from institutional investors, financial advisers and end retail investors.
On 26 February, 2016, Eaton Vance launched NextShares, Exchange Traded Managed Funds, a hybrid between mutual funds and ETFs, which are not required to disclose their investments every day. ETFMs are priced on a plus or minus NAV basis at the end of the day which requires brokers to upgrade their technology to accommodate a different trading method.
The SEC has recently approved a number of Non-transparent Active ETFs or Active Non-transparent (ANTs), Semi-transparent, or periodically disclosed active ETFs (PDAs), which will disclose their holdings at least quarterly like a mutual fund). On 4 April, 2019 the SEC approved Precidian’s ActiveShares non-transparent Active ETF model which uses an Authorised Participant Representative to keep the holdings in the ETF confidential.
On 14 November, 2019, the SEC issued notices to Blue Tractor, Fidelity, Natixis and T Rowe Price approving four “proxy basket” active semi-transparent ETFs. Two other models by EatonVance and Invesco are still pending with the SEC. As of today we have not seen any products listed using these new models.
“At the end of February, the S&P 500 was down 8.2 per cent as coronavirus cases continued to spread and the potential economic impact weighed on investors and the markets,” says Deborah Fuhr, managing partner, founder and owner of ETFGI. “Outside the US, the S&P Developed ex-US BMI declined nearly 9.0 per cent. The S&P Emerging BMI lost 5.1 per cent during the month. Global equities as measured by the S&P Global BMI ended down 8.1 per cent with 49 of 50 included country indices down, while China gained 0.9 per cent.”