Mutual fund giant T. Rowe Price has long been itching to get into the ETF game, and the company today announced that day is near after the Securities and Exchange Commission gave its final approval for the company to launch four actively managed equity ETFs that mimic existing mutual fund strategies and which don’t have to disclose their holdings on a daily basis.

The company will join the ranks of big-name fund managers which this year have rolled out so-called semi-transparent, actively managed equity ETFs that don’t have to disclose their holdings on a daily basis like traditional ETFs are required to. American Century, Legg Mason and Fidelity Investments launched their semi-transparent ETFs in the spring.

In the case of T. Rowe Price, the company’s name will be on the marquee of the Blue Chip Growth ETF, Dividend Growth ETF, Equity Income ETF and Growth Stock ETF. No ticker symbols have been announced, and the funds will debut in the third quarter, said Tim Coyne, the firm’s head of ETFs.

According to T. Rowe Price, each product will employ the same investment strategies and portfolio managers as their corresponding mutual funds. But the company isn’t worried about cannibalizing its existing mutual fund franchise.

“For us this is a natural extension of what we’re doing,” Coyne said, adding that T. Rowe Price has historically delivered its strategies in different structures including mutual funds and separately managed accounts.

“There’s a broader recognition that ETF investors have shown a preference for the ETF structure, and we’re meeting investors based on their preferences,” Coyne said. “We want to provide additional choice for investors in how they access our strategies.”

He noted that different structures are prevalent in different types of accounts. As such, he expects mutual funds to remain popular in nontaxable retirement accounts, whereas ETFs could find favor in taxable accounts because ETFs are a more tax-efficient vehicle.

Regarding fund fees, Coyne said that management fees remain consistent across strategies regardless of product structure, but that the lower operating costs of ETFs means those products will charge less.

The fees on T. Rowe Price’s suite of four ETFs range from 0.50% to 0.57%, whereas fees on the comparable mutual funds range from 0.62% to 0.69%.

T. Rowe Price says it first approached the SEC in 2010 about launching semi-transparent ETFs, and in 2013 it filed its first request for exemptive relief from certain provisions of the Investment Company Act of 1940 and SEC rules that ETFs need in order to be approved.

First « 1 2 » Next