While active ETFs make up only a fraction of the Australian landscape, they have been gaining in popularity as the nation’s A$2.9 trillion pool of retirement savings seeks higher returns. Funds under management in active and smart-beta ETFs -- those that use factor-based investment strategies -- surged 59% in the 12 months to September to A$8.1 billion, compared with a 29% gain for indexed ETFs, according to Rainmaker.

Chris Meyer, head of listed products at Pinnacle Investment Management Group Ltd. in Sydney, said that if the regulatory review dragged on it would impact the firm’s ability to come up with new active ETFs. Meyer estimated there were as many as 12 active ETFs in the pipeline waiting to list. Pinnacle has three active ETFs already listed.

ASIC confirmed there are active ETFs waiting to list, but declined to provide an estimate.

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The regulator’s decision to put on ice the approval of new active ETFs has prompted some providers to rethink their offerings.

EInvest’s Love said three active fixed-income ETFs the firm has put together with Daintree Capital, that were going to use the internal market making model, are now going to use an external market maker with a delay in the disclosure of their composition. One of the funds debuted on the Chi-X exchange on Tuesday.

For the other two, eInvest has worked with the regulator, Chi-X and peers to put in place “a limited disclosure regime,” Love said. That means there is daily disclosure of a pricing basket to the market, but the portfolio isn’t disclosed daily in full to the market to protect intellectual property, she said.

“We are supportive of the review to provide clarity and consistency to the internal market making processes for the industry,” she said.

Some active ETF providers already choose to publish more information about their holdings.

Fidante Partners offers two active ETFs on its ActiveX platform and discloses the portfolios every day to the broader market as well as market makers so everyone has the same information at the same time.

“They are fixed-income offerings and the portfolio managers are not concerned about replication and front-running due to the complexity of the portfolios and OTC nature of the underlying asset classes,” said Samuel Morris, a Sydney-based investment specialist at the A$60 billion asset manager.