ETFs that do not disclose holdings daily looking for SEC nod

NEW YORK (Reuters) – Market regulators are poised to approve trading of any new style of manufactured goods could bring more stockpickers to U.S. exchange-traded funds, reported by a filing on Monday.

The U.S. Securities and Exchange Commission's conditional approval will permit Precidian Investments to license a different method of actively managed exchange-traded fund (ETF) that, like traditional active mutual funds, won’t be essential to disclose precisely what it owns on a regular basis as most current active ETFs must.

The Precidian funds can tell you daily holdings in order to the latest subset of professional trader referred to as the “authorized participant representative” in an effort to facilitate the procedure of creation and redemption of ETF shares, the filing said.

The SEC, that have twice before declined to allow several light to Precidian's non-transparent active ETFs caused by concerns about regardless of if the funds' prices would track their holdings, claimed it would approve the proposal unless its commissioners commit to order a hearing.

Bedford, New Jersey-based Precidian’s ActiveShares technology – that has been licensed by fund companies including ETF giant BlackRock Inc (NYSE:BLK) – is designed for money managers who actively pick stocks and bonds rather then after having a market index.

The new items might spur fund managers to present more active ETFs and grow their performance by not revealing their trading strategies to rivals.

Daniel McCabe, founder of Precidian Investments, said many active managers happen to be not wanting to bring ETFs to trade mainly because they could not choose to expose their trades towards the public immediately.

The new structure offers investors the means to access those fund managers many different from the benefits enjoyed by ETF investors, including astounding to sidestep some capital gains taxes that accrue in mutual funds, McCabe said.

"The same benefits which are you peer at in today’s ETFs can be bought in this structure however it works not only to have an index-based product but tailored for active managers,” he stated.

"Choice fantastic news for investors.”

Asset management firm Legg Mason Inc (NYSE:LM) holds a minority equity position in Precidian.