Today, Legg Mason and its affiliate ClearBridge rolled out an actively managed ETF that relies on the Precidian model for what many refer to as “nontransparent active management.” The ClearBridge Focus Value ETF (CFCV) uses a fundamentally driven bottom-up process to select securities for a mainly large-cap U.S. portfolio.
The fund comes with an expense ratio of 0.50% and lists on Cboe Global Markets, the parent company of ETF.com.
Precidian’s ActiveShares model only requires an ETF to disclose its holdings every three months instead of daily and employs an Authorized Participant representative to confidentially execute the creations and redemptions on behalf of the AP.
The race to bring to market an ETF structure that would allow ETF issuers to implement more traditional active strategies in an ETF wrapper without the fear of revealing their portfolios’ “secret sauce” was only recently won after a decade-long struggle.
“This ground-breaking ETF is part of our commitment to delivering active investment excellence in the vehicles our clients and investors demand. This is another exciting step in the development of ETFs, giving investors greater choice and more opportunities to invest in otherwise inaccessible active strategies in a highly efficient and confidential ETF wrapper,” said ClearBridge Investments CEO Terrence Murphy in a press release.
Precidian’s ActiveShares model is the only one of the SEC-approved structures with currently trading ETFs available to investors. It is designed to maintain the secrecy of the portfolio while also providing many of the benefits of a traditional ETF, such as low costs and intraday liquidity. Legg Mason bought a majority stake in Precidian earlier this year.
CFCV is expected to hold a portfolio of 30 to 40 issuers, the fund document says. The new ETF joins two other ActiveShares ETFs launched earlier this year by American Century Investments, the American Century Focused Dynamic Growth ETF (FDG) and the American Century Focused Large Cap Value ETF (FLV).
Contact Heather Bell at [email protected]