He shouldn’t, because in a few weeks Gabelli’s company is launching its own actively managed ETF-like products that license the Eaton Vance NextShares model of exchange-traded managed funds. The company has filed with the SEC to issue up to five of these actively managed ETMFs.
“We are wanted to deliver active management to the customer in whatever package they prefer,” said Chris Marangi, a chief investment officer at Gabelli, who spoke in a phone interview. “The issue prior to the creation of this NextShare structure was how do active mangers create ETFs when they’re concerned about not disclosing their strategy in real time.”
Marangi will be the portfolio manager on one of those ETMFs, the Gabelli Media Mogul Fund, which will invest primarily in media companies that were spun off from—or are tracking stocks issued by—Liberty Media, which itself was spun off from AT&T in 2001. The fund also includes companies that resulted from subsequent mergers of any such spin-offs. The SEC says there are 28 U.S. and non-U.S. companies that fall under this umbrella.
As part of its ETMF structure, investors who buy the Media Mogul Fund won’t know its net asset value until the end of the day, much like a mutual fund, Marangi said.
“It allows the fund to mask some of its holdings. Obviously, an ETF is completely transparent at all times," he said, adding that ETMFs enable fund managers to avoid disclosing all of the positions they enter and exit.
ETMF proponents say this prevents sophisticated investors such as hedge funds from front-running the trades made by active fund managers.
Marangi said ETMFs are a way for active managers to use ETF-like vehicles, which are growing more popular with investors.