Envestnet has announced it plans to add NextShares products on its wealth management platform for financial advisors. NextShares is the brand name for a suite of exchange-traded managed funds (ETMFs), which are non-transparent, actively managed funds that are a hybrid of mutual funds and exchange-traded funds.

Mutual fund provider Eaton Vance late last year got approval from the Securities and Exchange Commission to bring the ETMF structure to market. This format employs net asset value (NAV)-based trading where fund shares would be purchased and sold on an exchange throughout the trading day at market-determined spreads to the fund's ending NAV on that day.

They are designed to facilitate trading without the need for daily portfolio transparency, which has been a big hang-up for mutual fund companies who want to cash in on the fast-growing ETF market but have been reluctant to roll out active ETFs with daily disclosure of portfolio holdings.

Eaton Vance acquired the rights to the ETMF structure from Managed ETFs LLC in 2010, and the following year formed a wholly owned subsidiary, Navigate Fund Solutions LLC, to develop and commercialize NAV-based trading of exchange-traded products. Along with creating ETMFs that mirror Eaton Vance’s existing mutual funds, Navigate plans to license the format to other fund companies.

According to NextShares, 11 investment management companies have indicated their intent to offer NextShares funds by filing exemptive applications with the SEC and entering into preliminary agreements with Navigate. Along with Eaton Vance, that group includes ALPS Advisors, Gabelli Funds, Hartford Funds and Ivy Funds.

NextShares products are being promoted as lower cost, more liquid alternatives to mutual funds.

Eaton Vance has announced plans to launch the first NextShares funds by year-end 2015, depending on final regulatory approvals and market readiness.

Regarding the latter, some industry observers question whether ETMFs will catch on with the investing public. Of course, that will be up to the investing public––including financial advisors––to decide after the funds begin trading.

Envestnet said it will make ETMFs available to advisors both on its wealth management platform and through its fund strategist portfolios.