ETFs Evolve -- For Better or Worse?

Although details are yet to be worked out, managed ETFs probably would have to make annual distributions of net gains on assets sold by fund managers -- triggering a tax rarely paid by index-ETF investors. However, like index ETFs, managed ETFs would not have to sell assets to meet customer redemptions.

Despite the many questions about just how managed ETFs will operate, most experts watching the market expect to see them offered in the next year or so.

To preserve the low costs and tax efficiencies of ETFs, a number of the managed variety will operate as a kind of hybrid, using strict rules rather than a lot of stock-by-stock analyses to determine what to buy and sell, Ptak says. Many, he predicts, will build on the "fundamental indexing" model of the WisdomTree funds, which start with standard indexes but then emphasize holding stocks in companies with especially high dividends or earnings . "I think we're going to see a whole lot of actively managed ETFs," Ptak predicts. "No question about it."

For more information about Knowledge@Wharton, click here.

« Previous Page

1 2 3 4 5

Next Page »