Oppenheimer eyes novel way of getting into actively managed ETF biz

Glavin says firm is mulling possibility of converting mutual funds into exchange-traded funds; won't introduce 'clones'
JAN 07, 2011
OppenheimerFunds is considering getting into the actively managed ETF business, potentially by converting an existing mutual fund into an exchange-traded fund, William Glavin, president and chief executive, said last week at the Money Management Institute's fall conference in New York. “We have spent a lot of time discussing the actively managed ETF space,” Mr. Glavin told the attendees. “But I don't see us introducing 65 clones of funds that we already have.” One of the major concerns that mutual fund managers have about launching actively managed ETFs is that the ETF structure offers complete, real-time transparency of the portfolio manager's trades — and thus could put them at a competitive disadvantage. But OppenheimerFunds believes it could launch actively managed ETFs in broad categories, such as large-cap growth, without causing too many problems. “In the large-cap growth category, we can sell a position at the end of the day,” Mr. Glavin said. “But in an emerging markets fund, it can take 30 days to unwind a trade, and if we have to disclose that trade on Day One, we can't do it.” Oppenheimer executives have talked about converting some of their existing funds into ETFs, but isn't sure if the regulators would allow it, Mr. Glavin told InvestmentNews. In June, Huntington Asset Advisors Inc. filed with the Securities and Exchange Commission to launch two actively managed ETFs with the plan of converting existing mutual funds into them. If it receives approval, it will be the first firm to convert existing mutual funds into actively managed ETFs.

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