iShares to launch active ETFs

The US Securities and Exchange Commission (SEC) has granted iShares exemptive relief to launch actively-managed ETFs.

iShares filed its initial application to launch active ETFs over two years ago, before revealing plans for an active fixed income fund and an active equity fund.

The active fixed income offering will be an ETF of ETFs, investing 80% of its assets in fixed income ETFs recommended by BlackRock Fund Advisors (BFA) in order to provide a combination of income and capital growth.

The proposed equity fund, which seeks long-term capital appreciation, will invest in large cap US stocks selected by BFA for their relative return potential.

iShares suggests all constituent securities will be weighted equally and will seek to do this in "a transparent quantitative manner."

iShares' filing also states: "Applicants believe that the transparency of each fund will be at least equal to that of existing index-based ETFs and recently approved actively managed ETFs.

"In an effort to preserve transparency, the funds will provide market participants information regarding any such change in portfolio composition on T+1, the first day that such security would be reflected in the fund's NAV."

The SEC's decision to pass iShares' filing request paves the way for a series of active funds that may invest in equity or fixed income securities, a combination of both, as well as shares in other ETFs and money market mutual funds.