Vanguard is a step closer to offering actively-managed exchange-traded funds (ETFs) in the US after gaining approval from the Securities and Exchange Commission (SEC).
Vanguard filed for exemptive relief to offer transparent actively-managed ETFs in August last year, with the regulator giving its approval last week.
Vanguard first filed an exemptive relief request for transparent actively-managed ETFs in 2014 and but this was not granted by the SEC.
Vanguard, which already has actively-managed ETFs registered in Ireland and Canada, currently has 70 US-listed index-based ETFs, in addition to its larger mutual fund business.
The firm's move is seen as likely to increase cost competition in an industry that is already facing increasing fee compression.
Many traditional active managers are wary of launching transparent ETF versions of their actively-managed mutual funds because it would require them to disclose their portfolio positions on a daily basis.
In the SEC’s notice to Vanguard, the agency said that ‘each fund will disclose on its website the identities and quantities of the portfolio positions that will form the basis for the fund’s calculation of net asset value at the end of the day.’
A Vanguard spokesman confirmed that the firm has received the SEC’s approval notice, which is not yet set in stone and could still be reversed upon a potential final hearing.