BlackRock is seeking permission from the SEC to offer actively managed ETFs aimed at competing with stock-picking mutual funds.
The money manager applied to open 13 equity ETFs that wouldn’t disclose their holdings daily, according to a filing with the SEC. The firm already has permission to sell active ETFs that offer daily transparency.
The SEC hasn’t approved ETFs that wouldn’t reveal holdings daily. In a June 2010 interview, Andrew Donohue, then-head of the SEC’s investment management division, said the agency was concerned the lack of transparency would disrupt that mechanism.
That has discouraged companies from opening stock-picking ETFs because the transparency would allow other investors to mimic their holdings.
BlackRock’s newly proposed funds would seek to solve that problem by allowing large investors to create blocks of new shares in exchange for cash, instead of buying the underlying holdings and swapping them for the ETF shares. The funds would invest in a variety of equity categories such as large and midsize companies, and include versions free to bet on both rising and falling prices.
ETFs in the U.S. took almost half of the $2.01 trillion market for so-called passive products, which replicate the composition of a stock or bond index, as of the end of 2010, according to the Investment Company Institute. Firms managing or planning active ETFs are looking for a way to compete for the $10.8 trillion market of funds managed by stock and bond pickers.
Christine Hudacko, BlackRock spokeswoman, wouldn’t say when the company planned to introduce such funds, and she declined to comment on the new filing.
BlackRock, through its iShares unit, controlled about 39% of global ETF assets, including exchange-traded notes and trusts, with $640 billion as of June 30.