A Push Is On for Actively Managed ETFs

There are a few other contenders. In March, Bear Stearns (BSC Quote) filed its first prospectus for an actively managed ETF called the Current Yield Fund. This fund would act like a money market fund but seek higher returns by taking on some riskier investments.

And Gary Gastineau, who ran the American Stock Exchange's ETF department in the late 1990s, is a big proponent for actively managed ETFs. His firm, Managed ETFs, of Summit, N.J., has filed plans for a few funds but has yet to get the green light.

Industry insiders say the SEC has informally indicated that the first actively managed ETF also will be the most transparent.

That could work to PowerShares' advantage. According to SEC filings, its four proposed funds would provide more frequent disclosure of its holdings than the one from Grail Partners.

Meanwhile, the American Stock Exchange has taken steps to be the first exchange to list actively managed ETFs. It has received three patents for processes to trade actively managed ETFs without disclosing the portfolios. It has five more patents pending.

The Amex says it is deeply involved with some firms trying to bring the active ETFs to market, but it declined to mention names.

Whichever firm launches the first actively managed ETF will earn some serious bragging rights, not to mention first pass at mainline mutual fund investors.