The first exchange traded managed fund, a new fund structure that is a hybrid between an actively managed mutual fund and exchange traded fund, is set to launch Feb. 26. Eaton Vance, which developed the new structure, announced that its Eaton Vance Stock NextShares fund will list and trade on NASDAQ under the ticker EVSTC.
The fund will then be available to financial advisors, institutions and retail investors the following Monday through Folio Investing and Folio Institutional. Envestnet announced in August that NextShares will also be available to advisors using its digital wealth management platform.
Thomas Faust Jr., the chairman and CEO of Eaton Vance, said EVSTC is the first of 18 NextShares funds it has registered that represent a range of strategies including equity, fixed income, floating-rate income, absolute return and multi-asset funds.
“Our initial NextShares will offer investors access to established fund strategies in a new structure with significant potential investor benefits,” Faust said in a statement, calling the launch an opportunity to demonstrate NextShare's performance, tax efficiency and trading characteristics.
NextShares have been in development since 2011 by Navigate Fund Solutions, an Eaton Vance subsidiary, under the guidance of Stephen Clarke. While they trade on an exchange and have the built-in cost and tax advantages of ETFs, the funds aren’t required to disclose holdings on a daily basis. Eaton Vance says this gives active managers the potential to use their own research and strategy to achieve benchmark-beating returns.
Though the Securities and Exchange Commission rejected similar products from BlackRock and Precidian Investments, Eaton Vance’s version was approved in November 2014.
The first NextShares fund is intended for long-term capital appreciation by investing primarily in a diversified portfolio of common stock. Investments will be held on an indirect basis through a separate registered investment company, Stock Portfolio. Boston Management and Research, a subsidiary of Eaton Vance, will be Stock Portfolio’s investment advisor, and Charles Gaffney will serve as the portfolio manager.