Blackrock files to license active non-transparent ETF structure

Blackrock. is moving ahead with plans to launch a new kind of exchange-traded fund that doesn’t report its holding on a daily basis.

Photo: Lucas Jackson/Reuters/Ritzau Scanpix/Reuters / X90066

The world’s largest asset manager filed to license the structure of Precidian Investments’ ActiveShares product, which requires funds to publish an indicative value of the holdings every second. The model also uses an agency broker to confidentially buy and sell securities to help money flow into or out of the fund.

Issuers across the EUR 3.5 trillion (USD 4 trillion) ETF industry are unveiling so-called active non-transparent funds that keep their portfolios hidden, in contrast to daily disclosure of traditional ETFs. Money managers launching such products say that model wards off potential front-running or copycat strategies.

JPMorgan Chase & Co.’s asset management arm is among those that have decided to test the actively managed nontransparent model this year. Most recently, Legg Mason kicked off a value-focused product last week.

Blackrock is also planning to launch three actively managed-funds: a Future Health ETF, which will invest in equities in the health-sciences industry; a Future Innovators ETF tracking mid- and small-cap companies with earnings growth potential; and a Future Tech ETF focused on firms with rapid and sustainable growth prospects.

Traditional active ETFs are also becoming increasingly popular in the industry, with a record number of new products launched so far this year.

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