What is an 'Exchange-Traded Mutual Fund - ETMF'

An exchange-traded mutual fund (ETMF) is an exchange-traded security that is a hybrid between an exchange-traded fund (ETF) and an open-end mutual fund. It may also be known as an exchange-traded managed fund. ETMFs allow a standard net asset value (NAV)-based mutual fund to trade in real-time on a stock exchange, similar to the trading of a stock or ETF.

Exchange-traded mutual fund intraday trading prices will be directly linked to the fund’s next end-of-day NAV. All bids, offers and trade prices will be quoted in terms of premium or discount to the end-of-day NAV (like NAV+$0.02 or NAV-$0.05). For each trade, the premium or discount to NAV is locked-in at trade execution time and the final transaction price is determined once NAV is calculated at the end of the day.

BREAKING DOWN 'Exchange-Traded Mutual Fund - ETMF'

An exchange-traded mutual fund is essentially a mutual fund available in the guise of an ETF. Exchange-traded mutual funds offer the benefits of both mutual funds and ETFs. They can combine the advantages of investment strategies of an actively managed mutual fund and the performance and tax efficiencies of an ETF.

Exchange-traded mutual funds differ from a traditional ETF in many ways. They are not required to disclose their portfolio holdings on a daily basis, enabling them to protect confidential portfolio trading details. The funds trade in real time using NAV-based trading with prices quoted in terms of premium or discount. Exchange-traded mutual funds utilize “in-kind” transfers of portfolio securities in redeeming and issuing fund units, thereby saving on transaction costs. Exchange-traded mutual funds can give intraday and short-term traders some arbitrage and speculation opportunities on mutual funds. The funds pay capital gains and offer dividend income for long-term investors.

ETMF Investing

Eaton Vance offered one of the first ETMFs in February 2016, Eaton Vance Stock NextShares (EVSTC). EVSTC invests in growth stocks and is also offered as a mutual fund, the Eaton Vance Stock Fund. As of December 31, 2017, EVSTC reports a since inception NAV return of 17.67%.

Since the launch of EVSTC numerous other ETMFs have also been launched by NextShares, a wholly owned subsidiary of Eaton Vance. Other NextShares funds include: Floating-Rate NextShares (EVFTC), Global Income Builder NextShares (EVGBC), Oaktree Diversified Credit NextShares (OKDCC), Stock NextShares (EVSTC) and TABS 5-to-15 Year Laddered Municipal Bond NextShares (EVLMC).

NextShares are only offered through a limited number of brokers. In November 2017, UBS announced they would be offering NextShares through their financial advisor network and brokerage platform.

  1. Exchange Traded Managed Fund - ...

    Exchange traded managed funds (ETMF), branded as NextShares, ...
  2. No Transaction Fee Mutual Fund

    A no transaction fee mutual fund is a mutual fund with no associated ...
  3. Mutual Fund Yield

    Mutual fund yield is a measure of the income return of a mutual ...
  4. Exchange Fees

    Exchange fees are a type of investment fee that some mutual funds ...
  5. Vanguard Exchange-Traded Funds

    Vanguard exchange-traded funds are a class of funds offered by ...
  6. Fund Supermarkets

    Fund supermarkets refers to investment firms or brokerages whose ...
Related Articles
  1. Investing

    Are NextShares the Future of Funds? (EVSTC)

    Eaton Vance's NextShares are expected to revolutionize both the ETF and mutual fund industries
  2. Investing

    What You Need to Know About Mutual Funds

    Mutual funds are a good investment opportunity, but investors should know how they operate.
  3. Investing

    Mutual Fund Vs ETF: Which is Right For You?

    Want to invest but don't understand the difference between investment products? Here we explain ETFs vs. Mutual Funds and which is right for you.
  4. Investing

    A Guide to Mutual Funds Trading Rules

    Make sure to review this guide on the dos and don'ts of mutual fund trading before you invest, including how trades are executed and which fees to look out for.
  5. Financial Advisor

    5 Disadvantages of Mutual Funds Compared to ETFs

    In the mutual funds vs. exchange-traded funds debate, ETFs have some clear advantages.
  6. Retirement

    The Top 5 Eaton Vance Funds for Retirement Diversification in 2016 (EV)

    Learn to increase the safety, returns and diversification of your retirement savings by investing in mutual funds from Eaton Vance.
  7. Financial Advisor

    How to Rate Your Mutual Fund Manager

    What to really look for when you're deciding on a mutual fund.
  8. Investing

    How Much Company Stock Can a Mutual Fund Own?

    There is no written rule that stipulates how much of a company a mutual fund can own.
  9. Investing

    How Mutual Funds Affect Stock Prices

    Find out how mutual fund trading activity -- and that of other institutional investors -- impacts stock prices, including both short and long-term effects.
Trading Center