Active Funds and Other Changes in the ETF Industry
by Tom Lydon and Charles Rotblut, CFA
Tom Lydon is editor and publisher of the ETF Trends website. I spoke with Tom recently about developments in the exchange-traded funduniverse.
Charles Rotblut (CR): It seems that, in part, the future growth in actively managed exchange-traded funds will be dependent on how the SEC applies the so-called ’40 act. Can you provide a brief explanation of what this act is and how it applies to ETFs?
Tom Lydon (TL): The Investment Company Act of 1940 set standards by which investment companies should be regulated. The standards dictate how investment companies operate (promotion, reporting, requirements, pricing and allocation). The Dodd-Frank Act of 2010 overhauled the 1940 act to provide more consumer/investor protection and uniform standards for products.
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Charles Rotblut, CFA is a vice president at AAII and editor of the AAII Journal. Follow him on Twitter at twitter.com/charlesrotblut.