Active managers have been locked in a 30-year war of attrition against passively managed exchange-traded funds, which have transformed from niche to juggernaut, representing roughly $4 trillion in assets today.
However, a recent decision by the Securities and Exchange Commission, which paves the way for active managers to offer so-called “nontransparent” ETFs, is being vetted by a number of industry participants as potential salvation for beleaguered money managers, who have both underperformed passive ETFs that track an index, like the S&P 500 SPX, SPY, or the Dow Jones Industrial Average DJIA, DIA, and experienced eroding market share.
On Monday, the SEC issued a decision, allowing Precidian, which owns the ActiveShares ETFs, to begin working with mutual-fund providers, including Legg Mason, American Century Investments, BlackRock Inc. BLK, Capital Group, and JPMorgan Chase & Co. JPM, among others, to create actively managed ETFs.

Read the Full Article