BOSTON, Oct. 13, 2011 /PRNewswire/ -- Eaton Vance Corp.
(NYSE: EV) today announced the formation of a wholly owned
subsidiary, Navigate Fund Solutions LLC, to commercialize net asset
value (NAV)-based trading of exchange-traded funds (ETFs) and
develop exchange-traded managed funds (ETMFs). ETMFs are a proposed
new type of registered investment fund that seek to combine
features and benefits of ETFs and traditional actively managed
mutual funds. Navigate is the successor to Managed ETFs LLC, a
developer of intellectual property in the field of ETFs that Eaton
Vance acquired in November 2010.
Eaton Vance also announced the appointment of Stephen W. Clarke as President of Navigate Fund
Solutions. As President, Mr. Clarke will be responsible for leading
and managing the development and marketing of ETMFs and NAV-based
trading.
ETMFs seek to provide the shareholder protections and operating
efficiencies offered by the ETF structure to active investment
strategies, while maintaining the confidentiality of portfolio
trading information. ETMFs eliminate the need for portfolio
transparency to achieve tight trading markets in fund shares by
utilizing NAV-based trading. In NAV-based trading, fund shares are
purchased and sold on an exchange throughout the trading day at
market-determined spreads to the fund's ending NAV on that day.
While novel in the ETF market, basing fund transaction prices on
end-of-day NAVs has been the standard in the mutual fund industry
for decades.
Applied to conventional ETFs, NAV-based trading can improve the
efficiency of trade executions and significantly enhance trading
cost transparency. NAV-based trading provides ETF market makers
with a simpler and more reliable arbitrage profit opportunity than
available in conventional intraday ETF trading, which should
translate into tighter bid-ask spreads and narrower premiums or
discounts of market prices to underlying fund asset values.
Investors can know and control their cost of trade execution in the
NAV-based marketplace with a precision that cannot be achieved in
conventional ETF trading. The benefits of NAV-based trading can be
particularly pronounced for investors in the large and growing
universe of non-benchmark index ETFs that trade in low volumes.
ETMFs are actively managed exchange-traded funds utilizing
NAV-based trading. Like most conventional ETFs, ETMFs will create
and redeem shares in aggregation units primarily through the
delivery of portfolio securities. Different from today's fully
transparent active ETFs, ETMFs will not disclose the identity of
fund holdings that are subject to current trading activity, thereby
protecting against potential front-running of fund transactions.
Compared to conventional actively managed mutual funds, ETMFs offer
the promise of consistently lower expenses and consistently
improved performance and tax efficiency. By addressing the
conflicts between less active and more active fund investors,
larger and smaller holders, and taxable and non-taxable accounts
inherent to the mutual fund structure, ETMFs can provide improved
shareholder outcomes across a broad range of investment strategies
and fund types.
Navigate Fund Solutions is in the process of pursuing U.S.
regulatory approval of ETMFs and NAV-based trading, the timing and
likelihood of which is uncertain. Following approval, Navigate
intends to pursue a two-part commercialization strategy: first,
launching a family of Eaton Vance-sponsored ETMFs that mirror
existing mutual funds and, second, licensing the associated
intellectual property to other fund groups.
"ETMFs have the potential to transform the $7 trillion actively managed mutual fund market
in the U.S. By lowering fund operating costs and enhancing
shareholder returns and tax efficiency, they level the playing
field between active and passive strategies and provide enormous
potential benefits to fund investors," said Thomas E. Faust Jr., chairman and chief
executive officer of Eaton Vance Corp. "I am confident that, under
the leadership of Stephen Clarke,
Navigate Fund Solutions can realize the exciting potential of ETMFs
and NAV-based trading."
Before joining the Eaton Vance organization, Mr. Clarke was a
Senior Vice President of Old Mutual Asset Management responsible
for overseeing a portfolio of institutional and alternative
investment management affiliates for over 10 years. He previously
served as marketing manager at United Asset Management, prior to
its acquisition by Old Mutual. Earlier in his career, Mr. Clarke
held assurance consulting, business development and client service
positions at Coopers & Lybrand, the Berkshire Companies and
Putnam Investments. He is a graduate of the University of Massachusetts and holds an M.B.A.
from the Wharton School at the University of
Pennsylvania.
Eaton Vance Corp. is one of the oldest investment management
firms in the United States, with a
history dating to 1924. Eaton Vance and its affiliates managed
$177.8 billion in assets as of
September 30, 2011, offering
individuals and institutions a broad array of investment strategies
and wealth management solutions. The Company's long record of
providing exemplary service and attractive returns through a
variety of market conditions has made Eaton Vance the investment
manager of choice for many of today's most discerning investors.
For more information about Eaton Vance, visit
www.eatonvance.com.
SOURCE Eaton Vance Corp.