Daily ETF Watch: BlackRock Revives Active Filing

BlackRock filed paperwork on an exemptive relief request for ETFs that will not be marketed under the iShares brand name. The 40-APP paperwork from Spruce ETF Trust outlines plans for 13 ETFs covering U.S. large-caps that will be actively managed and nontransparent.

The firm made a similar filing involving the Spruce ETF Trust back in 2011, and eventually, it became one of the ETF issuers that was announced as a licensee of Precidian, which had developed a proprietary methodology for nontransparent active ETFs. That all fell apart in the fourth quarter of last year, when the SEC rejected the Precidian methodology, leading to the withdrawal of the exemptive relief applications based on it.

Precidian has since refiled with the SEC, and the new BlackRock filing appears to use the same revised methodology. Essentially, in this new version, the intraday indicative net asset value (iNAV) has been replaced by the “verified intraday indicative value” (VIIV). VIIV is a more up-to-date metric than the iNAV.

The ETFs will use blind trusts, or “confidential brokerage accounts,” to maintain their opaqueness. Each authorized participant will have their own blind trust that will handle the creation and redemption activity and receive daily updates on the holdings of the funds.

The Spruce ETFs outlined in the new 40-APP filing are essentially the same as those in the original. The components for all of them will be drawn from the Russell index universe of domestic large- and midcap stocks. The initial ETFs are as follows:

• Large Cap Fund
• Large Cap Value Fund
• Large Cap Growth Fund
• Large/Mid Cap Fund
• Large/Mid Cap Value Fund
• Large/Mid Cap Growth Fund
• Large Cap Long-Short Fund
• Large Cap Value Long-Short Fund
• Large Cap Growth Long-Short Fund
• Large/Mid Cap Long-Short Fund
• Large/Mid Cap Value Long-Short Fund
• Large/Mid Cap Growth Long-Short Fund and
• Large Cap Growth Active Insights Fund

Contact Heather Bell at [email protected].