ASIC’s decision – handed down today – to allow opaque actively managed funds to trade on exchange like regular ETFs has busted the dam wall.
It has paved the way for global asset managers to flood Aussie exchanges with their active funds, which will be created anew as ETFs.
Fidelity, the world’s largest broker dealer, is set to list its entire suite of active funds as ETFs, ETF Stream understands.
While UK-based funds giant Janus Henderson is set to list its active funds as ETFs too. Many other managers are set to join them.
The freshet of new listings gives body to previous warnings from passive ETF providers and market makers. They warned that allowing some active managers (Magellan, in 2015, was the first) to list their funds as ETFs could prove a thin end of the wedge.
They warned that if one active manager were allowed to list its opaque funds on exchange, that soon all active managers could list their opaque funds on exchange.
Of particular concern was that the gains of index investing in Australia, which is by its nature low cost and transparent, could be diluted as high fee active funds could start selling themselves as ETFs.
Active ETF providers have welcomed ASIC’s decision. Some regarded passive ETF providers concerns about transparency as a fig leaf for wanting to hog the exchange.
Many thought the ban on active ETFs was unfair and created a false barrier to intellectual property being accessed by investors.