Eaton Vance Corp.EV has postponed the launch of its ambitious NextShares funds to 2016, as the first-of-its-kind investment product is still awaiting final approval from the U.S. Securities and Exchange Commission ("SEC"). The company was reportedly aiming a launch by the end of 2015.
According to Kristine Delano, managing director of marketplace strategy at Navigate Fund Solution (a subsidiary of Eaton Vance that manages the NextShares funds), the SEC has suggested the company to incorporate visuals into its registration statements so as to "help investors input trades". Notably, the company is working toward the same.
Though SEC approval might come before 2015, Delano believes that the advancing holiday season will be an unfavorable environment for launch of its NextShares brand.
Moreover, initially, the company plans to bring only its own brand of NextShares funds on board, and thereafter intends a gradual launch of funds licensed by partner companies. This is different from the company's prior plans of launching all NextShares funds together.
What Makes NextShares Attractive?
NextShares is an exchange-traded managed fund ("ETMF"), a hybrid between traditional mutual fund and exchange-traded fund ("ETF"). First-of-its-kind funds developed by Eaton Vance to re-empower active asset management, these provide investors with benefits of passive management in the form of reduced expenses and increased transparency.
As such, the company remains highly ambitious regarding its invention. Moreover, it is likely to reap significant gains from the first-mover advantage.
Eaton Vance's Progress with NextShares
Eaton Vance has partnered with 11 fund companies to distribute the hybrid product, including Columbia Threadneedle Investments, Envestnet, Inc. ENV and Ivy Investment Management Company.
Further, in Sep 2015, the company managed to get its first broker-dealer partner in Folio Investing and Folio Institutional, which are offered by FOLIOfn Investments, Inc., a self-clearing broker-dealer. We believe Eaton Vance's progress with NextShares funds will put to rest analysts' concerns over the distribution of this hybrid product.
Moreover, we expect the company to enjoy a near-term monopoly in the space, since players like Precidian Investment, BlackRock Inc. BLK and State Street Corp. STT , among others, are still awaiting the initial SEC approval to offer this hybrid product.
Eaton Vance currently holds a Zacks Rank #4 (Sell).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
