Vanguard to launch actively managed ETFs

Mar 10, 2014 @ 11:44 am

Vanguard Group Inc., the third-largest U.S. provider of exchange-traded funds, has asked regulators for permission to open actively managed ETFs.

Approval would allow Vanguard to offer ETF share classes for its existing actively managed mutual funds, including the $82 billion Wellington Fund, according to an application filed with the U.S. Securities and Exchange Commission. The firm has no immediate plans to offer active ETFs should it receive approval, according to Joel Dickson, a senior ETF strategist at Vanguard.

“It's all about having the permission so at some point, if a fund board wishes to do this, the first step has been taken,” he said. The firm would be required to file additional applications for specific funds to sell ETF shares, Mr. Dickson said.

Actively managed ETFs combine the advantages of a stock or bond-picking manager with the tradability of an ETF, which can be bought or sold on an exchange throughout the day. Active managers have largely shied away from offering ETF versions of their products because ETFs are required to disclose all their holdings every day, revealing their investing strategies.

On the bond side, where transparency is less of a concern because it's harder to replicate a fund's holdings, some active ETFs have proved successful. The Pimco Enhanced Short Maturity ETF, offered by Pacific Investment Management Co., holds $3.96 billion.

Vanguard's proposed active ETFs would be fully transparent. Approval would make it possible for its stock, bond and balanced mutual funds to offer ETF share classes. The firm's existing ETFs, which hold $346 billion, are share classes of Vanguard index mutual funds, a structure the firm patented.

(Bloomberg News)

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

5 tech innovations you can't afford to ignore

Technology innovation is always top of my at Pershing. What does Pershing have on tap for 2018 and beyond.

Latest news & opinion

Small broker-dealers seek legislative relief from annual audits

Bills introduced in House, Senate would remove PCAOB requirement.

Meet our new 40 Under 40s

For a fifth year, InvestmentNews is proud to shine a spotlight on the amazing accomplishments and potential of top young financial professionals.

Merrill re-evaluates commission ban in retirement accounts

The wirehouse's wealth management group announces a fresh look at the ban now that the DOL rule is on the brink of death.

10 biggest retirement mistakes

Adhere to enrollment deadlines and distribution rules or pay a hefty penalty.

DOL fiduciary rule on brink of death as key deadline passes

Justice Department didn't petition the Supreme Court to rehear the case. A mandate from the 5th Circuit would finally lay the fiduciary rule to rest.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print