September 2, 2011

BlackRock Files to Expand ETF Offering With 13 Actively Managed Funds

The funds wouldn’t make daily disclosures on holdings

BlackRock has filed with the Securities and Exchange Commission to offer 13 equity ETFs, Bloomberg reported Thursday. The actively managed ETFs are designed to compete with stock-picking mutual funds.

They wouldn’t disclose their holdings daily, according to Bloomberg. The company already has permission to offer active ETFs with daily transparency.

The SEC hasn’t approved ETFs that don’t reveal their holdings on a daily basis, Bloomberg notes, on fears that the lack of transparency would “disrupt the mechanism,” Andrew Donohue, then head of the SEC’s investment management division, told Bloomberg in a June 2010 interview.

To prevent other investors from mimicking the holdings in their active ETFs, BlackRock will allow large investors to create blocks of shares in exchange for cash, Bloomberg writes.

The funds would invest in large and midsize companies, and include versions free to bet on both rising and falling prices, Bloomberg writes.

Bloomberg cites the Investment Company Institute which found the market for passive products was worth over $2 trillion at the end of 2010; ETFs account for almost half of that.

In late August, BlackRock filed with the SEC to allow its iShares ETFs to follow its own indexes rather than those created by third parties like Standard & Poor’s. According to Bloomberg, the SEC approved BlackRock’s request to begin selling actively-run ETFs that would make daily holdings disclosure.

Christine Hudacko, a spokeswoman for BlackRock, told Bloomberg she wouldn’t say when the company planned to introduce those funds and declined to comment on the new filing.

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