Exchange-traded fund firms are taking heart from recent approvals by the Securities and Exchange Commission which allow mutual funds to invest larger amounts in ETFs. The SEC recently gave 12(d)(1) exemptive relief to The Vanguard Group‘s re-named Vanguard ETF lineup, according to a news update posted on Vanguard’s advisor Web site. The rule limits the amount one registered investment company can invest in another.
WisdomTree Investments and Van Eck Global have also been granted the exemption, according to prospectuses on the firms’ Web sites.
“It’s a big deal,” said Bruce Bond, president of PowerShares Capital Management.
PowerShares has a similar application pending. “It’s even more important when you have smaller funds or funds that are growing to have this type of relief,” said Bond.
State Street Global Advisors’ SDPR and Diamond ETFs have obtained the exemption as has Barclays Global Investors’ iShares line. SSgA’s streetTRACKs and Select Sector SDPR lines have filed for the exemption but are awaiting approval.