A Push Is On for Actively Managed ETFs

Despite the obstacles, a number of ETF providers are on a quest to make stock-picking expertise available through these investment vehicles.

Coincidentally, the most recent prospectus filing comes from Grail Partners, a merchant banking firm specializing in investment management. Its proposed Grail U.S. Value Fund would seek to outperform the Russell 1000 Value Index by 2 to 4 percentage points a year.

The Grail filing follows on the heels of four proposed offerings by PowerShares, a unit of Invesco (IVZ Quote), in late November.

Three of the proposed funds would invest in stocks: The PowerShares Active AlphaQ Fund would use a quantitative screen to choose the best 50 stocks on the Nasdaq; the PowerShares Active Alpha Multi-Cap Fund would use a similar methodology to pick 50 large-cap stocks, and the PowerShares Active Mega-Cap Portfolio would hold 50 "mega-cap" U.S. stocks.

The fourth potential offering is a bond fund. The PowerShares Active Low-Duration Portfolio would seek to outperform the Lehman Brothers 1-3 Year US Treasury Index.

The proposed funds aren't really new, however. AER Advisors, a small investment management firm in Rye Beach, N.H., filed an application to launch these ETFs several years ago but never received the go-ahead from the SEC.

PowerShares, the ETF powerhouse from Wheaton, Ill., recently partnered with AER to rebrand the funds. AER will be the fund's adviser, and PowerShares will distribute the shares.

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