Actively Managed Exchange-Traded Products at Age Seven
The first actively managed exchange-traded product (ETP) was launched in March 2008. Seven years after initial introduction, first-generation active ETPs have total net assets of $19.46 billion – less than 0.2% of the combined assets of actively managed mutual funds and active ETPs. The slow development of active ETPs primarily reflects the reluctance of fund sponsors to offer leading active strategies in a format that requires daily disclosure of fund holdings. Unlike first-generation active ETPs, NextShares are not required to disclose their daily holdings and can therefore maintain the confidentiality of fund trading information. Operating as NextShares, active ETPs can realize their full potential as alternatives to traditional mutual funds with built-in performance and tax advantages and the convenience of exchange trading.