One reason equity managers haven't opened more active products is that ETFs reveal their holdings daily because institutional investors need to know a fund's composition to create new blocks of shares. That process also keeps an ETF's share price aligned with the value of its assets. The requirement has discouraged companies from opening stock-picking ETFs because it would allow other investors to copy their trades.
BlackRock's Request
So far, Pimco's actively managed ETFs have focused on highly liquid markets, including Treasuries, where other investors mimicking the trades are less likely to affect prices. Fixed-income investments are also more difficult to copy because transactions don't occur on an open exchange.
BlackRock, the largest provider of ETFs, has a filing pending with the SEC to offer 13 actively managed equity ETFs that don't have to disclose their holdings daily. The firm received initial SEC approval a year ago to offer actively managed ETFs that disclose their holdings each day. Christine Hudacko, a spokeswoman for New York-based BlackRock declined to comment on the filings.