One of the most significant investment product development trends from 2005 to 2007 has been the rise in the number of firms seeking new ways to provide regular, predictable income payments without having to use insurance contracts. In 2005, only 44% of firms reported that they were planning to eventually offer products that use “non-insurance approaches to guaranteeing income,” but this figure jumped to 71% in 2007. However, despite the interest in non-insurance techniques, insurance products will definitely play a role in the retirement income product line.

In early 2008, the first Exchange-Traded Funds (ETFs) possessing the "active" label began to emerge, leading the asset management industry to begin assessing the impact this unique structure could have on the marketplace. Since 2000, FRC has closely monitored the ETF market, recognizing that this product had the capacity to change industry dynamics going forward. In its latest study on the ETF market, FRC teams with ETF expert Gus Fleites to explore the future of actively managed ETFs, the next frontier in the continuing evolution of ETFs.

In this study, titled Actively Managed ETFs: Competitive Threat or Passing Fad?,

Financial Research Corporation:

·         Track the evolution of the ETF structure, from the launch of SPDR in 1993 to the introduction of the first active ETFs in 2008, highlighting specific milestones in the product's development.

·         Evaluate the competitive advantages of the ETF structure over open-end mutual funds and other investment products in the delivery of active management strategies.

·         Identifies the roadblocks ETFs still face in their evolution toward true active management, including the need for transparency, regulatory delays, and the ability to attract market makers.

·         Discuss the factors that firms considering the build out of an actively managed ETF business must address, including regulatory, operational, and trading considerations, as well as potential distribution opportunities.

For more information on this report, contact FRC today at 866-532-8009 or e-mail frcinfo@frcnet.com.