Brian McCabe, Ropes & Gray
asset management partner, discusses active nontransparent ETFs
and the opportunities they offer to investors and asset managers of
traditional mutual funds.
Transcript:
I'm Brian McCabe, an asset management partner in Ropes &
Gray's Boston office. In this video, I'm going to discuss
active nontransparent ETFs and the opportunities they offer to
investors and asset managers of traditional mutual funds.
Potential benefits of ETFs relative to mutual funds
ETFs generally have a significant tax advantage over mutual
funds. There's no reason why they have to because traditional
mutual funds could transact in kind, but as a practical matter,
they really don't – that's one tenth of one percent
or less of their transactions are going to be in kind. In kind
transactions are much more tax efficient, so the primary benefit,
I'd say, is a tax benefit. You also pick up savings in transfer
agency costs because ETFs generally don't pay
