Known as the “NYSE Active Proxy Structure,” asset managers with active strategies have taken advantage of this regulatory change.
In August, Nuveen introduced a trio of actively managed ETFs targeting dividend stocks, ESG large caps and small company stocks using NYSE’s model.
The Nuveen Small-Cap Select ETF (NSCS), Nuveen Dividend Growth ETF (NDVG) and the Nuveen Winslow Large-Cap Growth ESG ETF (NWLG) all use a unique semi-transparent structure from NYSE that discloses daily holdings via proxy portfolios.
This investment approach combines the cost and tax efficiency benefits of ETFs while protecting alpha from the impact of front-running traders. It also provides a way for authorized participants and other market makers to measure the intraday value and associated risk characteristics of the fund’s actual portfolio.
Looking ahead, the market for actively managed ETFs appears poised to expand, as fund managers bring their solutions into an ETF wrapper.