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(Bloomberg) — Eaton Vance Corp. has won the backing of regulators for a new type of exchange-traded fund that won’t disclose holdings daily, paving the way for more actively managed funds to be offered in an ETF format.

The U.S. Securities and Exchange Commission said it plans to allow Eaton Vance’s proposed structure, which would initially apply to 18 funds, according to a statement from the Boston-based money manager. The funds would be offered under the NextShares brand.

Eaton Vance rose 17 percent to $43.90 Friday in New York. The shares had lost 12 percent this year.

The decision “is a major milestone in the development of NextShares,” Chief Executive Officer Thomas Faust said in the statement. “With the introduction of NextShares, investors will, for the first time, be able to access active strategies through a structure that provides the cost and tax efficiencies of an exchange-traded fund, while protecting the confidentiality of fund trading information.”

Eaton Vance’s proposal differs from plans from BlackRock Inc. and Precidian Investments that the SEC rejected last month.

Money managers have been discouraged from introducing active ETFs, which combine security selection with the intraday trading and some of the cost-saving features of traditional ETFs, because the SEC’s requirement for daily disclosure of holdings would make it easy for competitors to copy, and traders to anticipate, a manager’s portfolio changes.

Actively Managed

Actively managed ETFs account for less than 1 percent of U.S. ETF assets and are dominated by products that invest in bonds. Transparency is less of an issue on the fixed-income side, where the opacity and negotiated nature of transactions in the over-the-counter bond market protect managers.

ETFs have attracted regulatory scrutiny as assets surged more than 10-fold in the U.S. over the past decade to $1.7 trillion as of the end of 2013, according to the Investment Company Institute. The products are bundles of securities that trade on an exchange, like stocks. Investors in most mutual funds can buy or sell shares once a day, typically after markets close, and only directly with the fund.

Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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