Daily ETF Watch: Cohen & Steers Filing

Cohen & Steers plans nontransparent active ETFs.

Reviewed by: Heather Bell
Edited by: Heather Bell

Cohen & Steers plans nontransparent active ETFs.

Cohen & Steers, an investment manager best known for its activities in real estate, recently filed an exemptive relief request with the Securities and Exchange Commission, looking to launch actively managed ETFs via a blind trust.

One of the reasons many believe active ETFs have largely failed to take off is their transparency. Currently, only ETFs that provide daily disclosure have been approved for launch, but many investors are skeptical of active funds that disclose their holdings so regularly.

In the past year or so, several firms have filed for nontransparent ETFs, including BlackRock’s iShares, State Street Global Advisors and PowerShares. Most recently, the Capital Group, purveyor of the American Funds mutual funds, filed for nontransparent ETFs. All of those firms have used a patented structure developed by Precidian Investments, which has also itself filed to launch nontransparent actively managed ETFs.

Eaton Vance has also filed to launch nontransparent, actively managed “exchange-traded mutual funds” (ETMFs) using a different structure based on patents that it purchased from ETF industry figure Gary Gastineau.

The Cohen & Steers filing notes that the proposed ETFs will disclose their holdings on a quarterly basis, similar to regular mutual funds. The firm had filed for index-based as well as transparent actively managed ETFs back in October 2013, but has yet to launch any funds.

Although several firms have exemptive relief requests filed with the SEC regarding nontransparent actively managed ETFs, none has received approval to launch such products. An exemptive relief request is the first step in the process of bringing ETFs to the market.


Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.