Daily ETF Watch: Vanguard’s Active Plans

Vanguard asks regulators to approve its plans for transparent active ETFs.

Vanguard filed regulatory paperwork seeking permission to launch active ETF versions of its mutual funds, ranging from equity and fixed-income to muni-bond offerings. The filing comes at a time when ETF assets are rising to new record highs and mutual fund companies are looking to enter the world of ETFs in a variety of ways.

A Vanguard representative publicly stated that the firm is leery of daily disclosure requirements having an “adverse effect” on its proposed active ETFs, echoing a concern of other shops such as Eaton Vance, which is hoping that a brand of nontransparent ETFs, dubbed exchange-traded managed funds, sees the light of day in the near future.

While some mutual fund stalwarts like Vanguard and Eaton Vance are taking a direct route to the ETF space, other mutual fund firms, such as TCW, are partnering with ETF issuers such as State Street Global Advisors to launch active ETFs.

But whether they’re taking a direct or indirect route to the ETF market, mutual fund firms appear to now be recognizing they can’t ignore the steady growth of the industry. All told, some 1,570 ETFs currently manage about $1.737 trillion in assets, just shy of a record.

Launches

Global X on Tuesday, March 11, will launch the Global X Guru Small Cap Index ETF (GURX) and the Global X Guru International Index ETF (GURI) on the NYSE Arca, to complement its successful $598 million Global X GURU ETF (GURU | B-50).

Like GURU, both new Global X funds will use 13F filings used by hedge fund managers to drive stock selection in their respective markets, including domestic small-cap equities and international equities. Both funds will have annual expense ratios of 0.75 percent, or $75 for every $10,000 invested, according to a regulatory filing.

GURU attracted $363.6 million in 2013, according to data compiled by ETF.com.