Known as ANTs, this breed of funds help money managers offer their strategies in an ETF wrapper but with lower disclosure requirements, shielding them from front-running and copycats.
“Final approval of these ANTs is a huge driving factor,” said Bloomberg Intelligence analyst James Seyffart. “They probably would have gone into ETFs in the next few years, but with the ANTs, they’re like, ‘This is what we’re going to cling to, this is what we want.’”
T. Rowe Price’s first ETFs are actively managed funds that reveal their holdings once a quarter, rather than every day as conventional ETFs do. A spokesperson said the firm has long been interested in the active ETF wrapper and that they see significant opportunity for their clients using this format.
It may be appealing to issuers, but investor demand remains in doubt. Since the first issue in April, ANTs have only managed to attract about $300 million in assets.
Who’s Left?
The list of major ETF holdouts is shrinking fast, but a few names stick out.
Morgan Stanley has until now only dipped a toe into the market, helping launch an early series of ETFs in 1996 and issuing several exchange-traded notes. Capital Group, which manages more than $1.9 trillion in assets, has licensed a non-transparent ETF structure from Precidian, but has yet to launch funds.
A spokesperson from Capital Group said the firm is closely watching the market and exploring its options. A spokesperson for Morgan Stanley declined to comment.
“If you are not in the ETF business, you’re facing irrelevance,” said Linda Zhang, CEO of Purview Investments.
This article was provided by Bloomberg News.