Non-Index Exchange-Traded Funds On the Horizon

The entry of heavyweight Vanguard into the exchange-traded fund business should pave the way for other fund companies to launch their own versions of these new-fangled index products. But what about actively managed funds? Will they ever come in the exchange-traded variety?

The consensus at an industry conference in New York this week sponsored by the Institute for International Research is that they will. In fact, you can expect to see the first filings for these actively managed funds showing up at the Securities and Exchange Commission by the end of the third quarter, says Larry Larkin, senior vice president at the American Stock Exchange.

Larkin says six fund firms are toying with the idea of an actively managed exchange-traded fund, though he wouldn't name names. ...