The ETF Rule Proposal: Key Takeaways
The SEC ruled that there will be no differentiation in the rule set between active and passively managed ETFs. While they considered different treatment for passive ETFs (with specific data disclosure rules around tracking error being touted for passive funds), the SEC decided against it. This was a deliberate move by the SEC, as there is a proliferation of highly customized and methodologically complex indices that have rendered the difference between actively and passively managed ETFs irrelevant in their eyes. In the past, it was typically more difficult to obtain approval for actively managed ETFs due to perceived increased investment risk, so this change could lead to growth in active management.
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