Part II | Actively Managed ETFs | The “Next” big thing?

Working with ETFs.

Working with ETFs.

Part II of II. CLICK HERE | Read Part I

During a recent NICSA webinar, “NextShares – Working with ETFs,” presenters from an Eaton Vance Corp. affiliate, explained how their new class of fund shares, NextShares, differs from index ETFs and how companies considering adopting this structure can prepare to incorporate them.

How are NextShares different from ETFs?

The big difference is how NextShares are priced. While investors will be able to buy and sell NextShares on an exchange over the course of the trading day, similar to an ETF, technical trade completion will be at closing day NAV. This may discourage active intraday trading of NextShares as compared with ETFs.

Trades are completed only at the end of the day in order to allow NextShares to maintain the confidentiality of trading of securities within the fund. Traditional ETFs publish a complete list of portfolio holdings daily. In contrast, NextShares will only release holdings lists periodically, similar to traditional mutual funds.

How can fund firms prepare to use NextShares?

The organizational readiness process for NextShares is currently more complex than for an ETF. Here is a checklist from NextShares:

  • File Exemptive Relief application
  • File Exchange form 19B-4 (filed by NASDAQ on a company’s behalf)
  • Complete registration statements
  • Work with Navigate and the NextShares consortium to create educational and training materials for investors and FAs
  • Configure and test trading systems with ETP custodian/administrator

Visit NextShares for further information.

What do you think about the NextShares concept? Please share your thoughts with NICSA.

CLICK HERE | Read Part I

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