Critics of non-transparent, actively managed funds include proponents of passive fund strategies who hold that the majority of active managers fail to beat their benchmarks, so it’s a fool’s game to invest in active funds. Others believe that non-transparency isn’t in the best interests of investors, and that fears of frontrunning are overblown.

Todd Rosenbluth, director of ETF and mutual fund research at S&P Capital IQ, said in a report he doesn’t expect the NextShares fund family to grab much market share from current industry leaders. He offered that “investors would be flying blind as to what they are buying and be unaware of what changes active management were making to the portfolios.”

Clarke doesn’t think that will be a problem. “We think that by eliminating the need for daily holdings disclosure and bringing forward a better structure, we’re going to see tremendous interest and widespread adoption of the new structure,” he says. 

NextShares funds will be listed on the Nasdaq, which on Friday was granted approval by the SEC to adopt a new rule governing the listing and trading of exchange-traded managed funds.

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