Some major money management firms already have lined themselves up with Precidian for active non-transparent ETFs.
Heavyweights BlackRock, SSgA and Invesco Power Shares, the fourth larger ETF firm, as well as smaller ETF player Cohen & Steers Inc. and Capital Group, which has no ETFs now, all have signed licensing contracts with Precidian.
Capital Group spokesman Tom Joyce said the company filed with the SEC in August for non-transparent ETFs to “further the dialogue with the Securities and Exchange Commission and to be prepared for any potential changes in the competitive landscape.”
Mr. Joyce added, “We have no plans to offer ETFs at this time and the SEC filings should not be seen as a commitment to launch ETFs.”
A source familiar with Precidian's operations said the firm already is making plans to use its hoped for approval by the SEC to enter into subadvisory relationships with other money managers.
He said one possibility is that Precidian would be the sponsor of the ETF, which could be marketed and distributed and subadvised by better-known money managers.
The same source said that would give money managers a first-to-market advantage, while giving Precidian licensing fees. Most investors would not know the Precidian name, he noted.
As part of its filing with the SEC, Precidian has proposed a blind trust structure, which would enable the ETF market maker or authorized participant to handle orders without disclosing security selections. The ETFs would offer the immediate intraday trading of an ETF with real-time pricing.
Mark Criscitello, a principal of Precidian, said company officials would not comment on the SEC approval process. He said the company is committed to offering consumers a choice beyond passive ETFs.
The filing from Eaton Vance's Navigate proposed its exchange-traded managed funds also would not disclose daily holdings. Its funds would trade on an exchange, but pricing would not occur on a real-time basis. Instead, its prices would be linked to the fund's next-determined daily net asset value, similar to the way a mutual fund is priced.
Eaton Vance officials have said its structure will still offer advantages associated with ETFs, such as tax efficiency and lower fees than mutual funds.
Robyn Tice, a spokeswoman for Eaton Vance, said company officials would have no comment on the proposal before the SEC. But during a question-and-answer session after the company's quarterly results were announced Aug. 20, company CEO and Chairman Thomas E. Faust Jr. touted the potential financial impact of the ETMFs.
“While we can't predict the outcome of the regulatory process, we remain confident that, if approved, ETMFs have the potential to transform how actively managed strategies are delivered to fund investors in the U.S., with potentially quite significant financial implications for Eaton Vance,” said Mr. Faust, according to a transcript of the earnings call.