Why Isn't Vanguard in the Active ETF Biz?
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Tuesday, November 27, 2012

Why Isn't Vanguard in the Active ETF Biz?

An ETF giant is still shying away from actively-managed products.

"We haven't launched an actively managed ETF because of investment restrictions around derivatives, swaps and options and the disclosure requirements," Vanguard [profile] principal and senior ETF strategist Joel Dickson reportedly said. "Most active equity managers don't want what they are buying and selling to be known, so transparency can be a disadvantage."

Dickson shared those thoughts earlier this month on a "Remaking the ETF Landscape" panel discussion at a Bloomberg alternatives conference in New York City. Juliette Fairley of FA magazine reported on the panel.

Other panelists included: Alex Gurvich, managing partner of the Rockledge Group and PM of AdvisorShares' [profile] $1.25-million Rockledge SectorSAM ETF; Brian Parker, an advisor working with $1.3 billion at EP Wealth Advisors; Kevin Quigg, global head of the ETF strategy and consulting group at State Street Global Advisors [profile]; and Eric Balchunas, Bloomberg analyst and the panel moderator.

FA noted that there are currently 55 active ETFs holding five percent of total ETF products. AdvisorShares offers 16 of those active ETFs, WisdomTree [profile] 14, Pimco [profile] six and SSgA three.

The panelists talked about the benefits of active ETFs, the growing pains of the niche, and the strategies they're using to market such products.

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