NextShares wins its first adviser platform partner with Envestnet

An important milestone for a firm that wants active managers to fight back against the growth of index-tracking ETFs

Aug 18, 2015 @ 5:18 pm

By Trevor Hunnicutt

Envestnet Inc. said Tuesday it will make NextShares, a unique hybrid of mutual funds and ETFs, available to some of its 41,000 affiliated financial advisers, delivering Eaton Vance its first distribution partner for the product.

The deal is a big win for Eaton Vance, an actively managed mutual fund company that's hoping to replace those products with a potentially more tax-efficient vehicle that could lower costs and improve performance for investors. Envestnet is a major gatekeeper in the fast-growing market of independent financial advisers, providing services for over $700 billion in client assets.

In a statement, an Envestnet executive, Jim Patrick, described NextShares as a "groundbreaking fund structure" and said the company sees offering the funds as part of its mission to help advisers deliver "wealth management services in the most cost- and tax-efficient way possible."

ONLY APPROVED PRODUCT

NextShares was the first and remains the only structure approved by the Securities and Exchange Commission that allows an actively managed open-end fund to trade on exchanges without regularly disclosing its holdings. Portfolio managers resist disclosing the securities they buy and sell, in part to prevent being taken advantage of by competitors.

Index funds don't face similar restrictions. Those passive products have dominated the fast-growing $3 trillion global market for exchange-traded funds.

Since its approval, Eaton Vance has had to work hard to convince competitive money managers to license its patent and persuade broker-dealers that it is in their interest to make NextShares available to advisers even though the funds don't offer the same underlying fees to encourage distributors. Eaton Vance's NextShares-promoting subsidiary, Navigate Fund Solutions, has had to make that case before it even has a product on the market or a distribution partner.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Why millennial demand for ESG is falling on deaf ears

Editorial director Fred Gabriel and senior columnist Jeff Benjamin say there's a disconnect between the big appetite for environmental, social and governance funds in 401(k) plans and their offering.

Latest news & opinion

ESG options scarce in 401(k) plans

There's growing interest among plan participants, but reluctance to add funds that take into account environmental, social and governance factors persists.

Ameriprise getting ready to launch its bank

Firm's advisers will soon have access to lending products such as mortgages.

Envestnet acquires MoneyGuide for $500 million

Deal will allow Envestnet to deepen integrations between MoneyGuide and its other wealth management solutions.

Genworth move could signal big shift in distribution of long-term-care insurance

Insurers may turn to direct-to-consumer sales only, bypassing brokers and insurance agents.

Morgan Stanley threatens to pull out of Nevada over state's fiduciary rule

Wirehouse says it would not be able to work there under state's current proposal.

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