AdvisorShares selects BNY Mellon unit for custody of planned actively managed ETFs

AdvisorShares Investments LLC appears to have moved a step closer to launching its first actively managed exchange traded fund. BNY Mellon Asset Servicing, a unit of The Bank of New York Mellon Corp., said today that AdvisorShares of Bethesda, Md., has selected it to provide custody, fund accounting, fund administration, basket calculation and transfer agency services for its planned ETFs. “We are excited about the imminent launch of our first ETF and anticipate introducing additional products shortly,” Noah Hamman, the founder of AdvisorShares, said in a statement released by BNY Mellon. “The AdvisorShares ETF structure delivers the combined benefits of active management found in mutual funds with the advantages of an ETF, including tax efficiencies and real-time pricing and transaction capability.” Active managers tend to be leery of telegraphing their moves because they wish to prevent arbitrageurs from jumping in front of trades and adversely affecting the price of a stock in which they may be interested. AdvisorShares gets around the issue by proposing an actively managed ETF that doesn't invest directly in stocks but in other ETFs. That solves the arbitrage issue because it is much harder for an arbitrageur to affect the price of an ETF — essentially a basket of stocks — than that of a single stock.