3. Manage the Basket
Only Blue Tractor's ETF wrapper equips active portfolio advisers with the tools to fully manage the ETF's daily Creation Basket. Through Basket Management, ETF portfolio managers can focus on (1) lowering cost and improving tax efficiency and (2) fully cloaking portfolio trading in the ETF from predators.
The recent SEC ETF Rule Change (Rule 6c-11) pertaining to transparent ETFs notably permits 'custom' Creation Baskets as they can provide ETF advisors with compelling cost and tax advantages over non-customizable pro rata creation baskets, the industry standard to date.
Through this rule change Regulators recognised the operational efficiencies customised baskets offered managers as compared to pro rata slices. Blue Tractor wholeheartedly concurs with this recognition and believes pro rata slice baskets are an unwelcome & unnecessary restriction placed upon managers.
ETF wrappers, best-in-class active portfolio managers seeking to generate multiple sources of alpha will want to manage both the ETF fund portfolio and the Creation Basket.
Wrapper structures offering only a pro rata creation basket to active managers are at risk of obsolescence.
Always Stay in Stealth Mode When Trading
When further building, reducing, completely exiting or entering a new position, the market will have no idea of the managers actual or target weighting while the security remains within the basket.
Using the available Basket Management tools managers can overweight , underweight or maintain individual security holdings within the Creation Basket in order to create uncertainty in the minds of predatory traders who might be monitoring its composition.
Reduce Cost and Tax
ETF portfolio managers can manage the Shielded Alpha℠ Creation Basket to lower trading costs and boost capital gains tax efficiency during creation and redemption activity with APs. This is accomplished by simply over and underweighting select individual securities positions that are of interest. Lower trading costs and enhanced tax efficiency can translate into greater alpha for the fund.
The recent SEC ETF Rule Change (Rule 6c-11) pertaining to transparent ETFs notably permits 'custom' Creation Baskets as they can provide ETF advisors with compelling cost and tax advantages over non-customizable pro rata creation baskets, the industry standard to date.
Through this rule change Regulators recognised the operational efficiencies customised baskets offered managers as compared to pro rata slices. Blue Tractor wholeheartedly concurs with this recognition and believes pro rata slice baskets are an unwelcome & unnecessary restriction placed upon managers.
ETF wrappers, best-in-class active portfolio managers seeking to generate multiple sources of alpha will want to manage both the ETF fund portfolio and the Creation Basket.
Wrapper structures offering only a pro rata creation basket to active managers are at risk of obsolescence.
Always Stay in Stealth Mode When Trading
When further building, reducing, completely exiting or entering a new position, the market will have no idea of the managers actual or target weighting while the security remains within the basket.
Using the available Basket Management tools managers can overweight , underweight or maintain individual security holdings within the Creation Basket in order to create uncertainty in the minds of predatory traders who might be monitoring its composition.
Reduce Cost and Tax
ETF portfolio managers can manage the Shielded Alpha℠ Creation Basket to lower trading costs and boost capital gains tax efficiency during creation and redemption activity with APs. This is accomplished by simply over and underweighting select individual securities positions that are of interest. Lower trading costs and enhanced tax efficiency can translate into greater alpha for the fund.