Actively managed ETFs reach milestone as SEC approves NextShares funds

Dec 14th, 2015 | By | Category: ETF and Index News

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Eaton Vance, the investment manager behind the innovative NextShares active exchange-traded fund structure, has announced that the US Securities and Exchange Commission (SEC) has declared their approval for a range of NextShares funds.

Actively managed ETFs reach milestone as SEC approves NextShares funds

Stephen W. Clarke, President of NextShares Solutions.

The funds are the first of the NextShares products to gain approval from the SEC and the news marks an important milestone in the development of the active ETF industry.

“Today’s action by the SEC is the last regulatory step required to launch the initial NextShares funds,” said Stephen W. Clarke, President of NextShares Solutions. “We look forward to the staged introduction of NextShares beginning in the first quarter of 2016.”

Actively managed ETFs have been heralded by many for their low cost, efficiency and the tax benefits that the ETF structure enjoys. As such, their adoption and growth is expected to be one of the most significant developments in the investment management industry in coming years. This growth has been restricted however by challenges around finding the ideal fund structure, one which provides the active fund manager with the confidentiality they require while also providing the necessary transparency to appease regulators and facilitate liquidity providers such as market makers.

NextShares are a new type of actively managed fund designed to provide better performance for investors. As exchange-traded products, NextShares have built-in cost and tax efficiencies; however, unlike conventional ETFs, NextShares will not be required to disclose their holdings on a daily basis like traditional active ETFs, protecting the confidentiality of fund trading information and providing buyers and sellers of shares with transparency and control of their trading costs. As the funds trade on an exchange investors can place orders for the funds throughout the day, like a stock or an ETF. All orders to buy and sell NextShares are priced at the fund’s next daily net asset value (NAV), plus or minus a trading cost (premium/discount) determined when the trade executes.

The 18 NextShares funds which have been approved represent a broad range of actively managed investment strategies including equity, fixed income, floating-rate income, absolute return and multi-asset funds. A range of leading asset managers have also announced plans to offer NextShares funds to their investors.

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