Amex CEO sees actively managed ETF

NEW YORK (Reuters) - The first actively managed exchange-traded fund (ETF) could be ready for launch this year, Neal Wolkoff, chief executive officer of the American Stock Exchange said on Monday.

Wolkoff told the Reuters Exchange and Trading Summit in New York that the Amex has been issued patents for software that would make an actively managed ETF possible.

Other patents are pending, he said.

To date, of the nearly 500 ETFs in the United States, nearly all are based on an index of securities that is reconstituted periodically, such as quarterly.

So far, there is no ETF based on a portfolio that is actively managed, with positions being increased, decreased, added or eliminated as often as daily.

Active managers of traditional mutual funds regard an up-to-date list of the holdings and the size of the holdings as confidential information. An ETF depends on a group of market-makers with knowledge of the portfolio who create or redeem new shares according to market demand.

Traditional mutual funds are priced once a day generally at the end of the day, and the fund company issues or redeems shares in the fund.

ETFs trade throughout the day on exchanges.

The tracking software patented by the AMEX publishes a value of the fund throughout the day "without the manager actually disclosing what he's holding or the trades that he's making," Wolkoff said.  Continued...