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Will a New Type of Fund Give Active Managers a Fighting Chance?

Exchange-traded managed funds seek to lower the costs and increase the tax efficiency of active management.

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During the past 15 years, actively managed U.S. equity funds have suffered cumulative net redemptions of $367.8 billion, while passive domestic and international-stock funds have attracted a combined $1.89 trillion. Might the former group of funds be able to learn something from the latter?

Per  Eaton Vance's (EV) Navigate Fund Solutions unit, the answer to that question is yes. Navigate has obtained approval from the SEC to offer a new type of fund--the exchange-traded managed fund (ETMF)--which seeks to combine some of the best features of exchange-traded funds and traditional actively managed open-end mutual funds.

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Scott Cooley does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.