Manage the ETF Creation Basket
Fund advisors seeking to generate dual sources of alpha should consider managing both their actively managed ETF portfolio and the ETF Creation Basket. This will become the new normal for best-in-class active portfolio managers.
Blue Tractor's cloud platform equips fund advisors with easy-to-use tools to modify the daily generated Creation Basket in order to implement additional alpha generation opportunities during regular ETF creation and redemption activity. Through what Blue Tractor terms basket management, fund advisors can modify one or more securities' weightings in the Shielded Alpha℠ Creation Basket to (1) eliminate trading costs and (2) enhance portfolio tax efficiency. Moreover, these same basket management tools are used to (3) fully cloak portfolio trade execution when entering into a new position or exiting from one.
Blue Tractor's cloud platform equips fund advisors with easy-to-use tools to modify the daily generated Creation Basket in order to implement additional alpha generation opportunities during regular ETF creation and redemption activity. Through what Blue Tractor terms basket management, fund advisors can modify one or more securities' weightings in the Shielded Alpha℠ Creation Basket to (1) eliminate trading costs and (2) enhance portfolio tax efficiency. Moreover, these same basket management tools are used to (3) fully cloak portfolio trade execution when entering into a new position or exiting from one.
The SEC's 2019 Rule Change (6c-11) for transparent active and index-based ETFs notably permits custom baskets, affirming that dynamic basket management can provide fund advisors with operational, cost and tax advantages over non-customizable pro rata creation baskets. Most industry observers expect rapid and widespread uptake of custom baskets.
Based upon this dynamic it's clear that any new SEC-approved ETF wrapper for active portfolio management that can only offer a static, pro rata basket to fund advisors for creation and redemption activity is at risk of obsolescence.
Based upon this dynamic it's clear that any new SEC-approved ETF wrapper for active portfolio management that can only offer a static, pro rata basket to fund advisors for creation and redemption activity is at risk of obsolescence.