The first commentator on the Securities and Exchange Commission's proposal to ease exemptive approvals of new exchange-traded funds is asking for disclosure that if mutual funds invest in ETFs they "are creating an additional layer of fees" which cut investor returns. The writer of the April 9 letter, Ron DeLegge, is editor of an ETF Web Site, EFTGuide.com.
The main thrust of the SEC's March 4 proposal would be to codify the exemptive process, which would save time for firms seeking to launch ETFs. The proposal would also make it easier for mutual funds to invest in ETFs.
DeLegge said he could support easier fund entry if certain conditions were met, including disclosure that mutual fund fees diminished investor return.
"It's time," he said, "to create a new level playing field where one financial product doesn't have an advantage over the other...For too long, ETFs have been at a disadvantage in this regard, compared to traditional mutual funds."
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