Citing the goal of protecting investors without stifling innovation, the Commission also asked the SEC staff to explore the feasibility of a pilot program that would permit the introduction of actively managed ETFs.
An exchange-traded fund, or "ETF," is a registered investment company that is listed on a national securities exchange and trades at market prices in the secondary market. All existing ETFs seek to track the performance of various domestic and foreign equity market indices by replicating or sampling the securities of those indices.
An actively managed ETF would not seek to track the return of a particular index by replicating or sampling index securities. Instead, the investment adviser to an actively managed ETF could select securities consistent with the investment objectives and policies of the ETF without reference to the composition of an index. This type of ETF does not currently exist.
The public will have sixty days to comment on the concept release. However, the Commission directed the staff to continue to work with applicants who have pending applications to introduce new exchange traded products, including exchange traded products with actively managed portfolios, during this period.
