Envestnet To Make NextShares ETMFs Available On Its Platforms

by: Brian Haskin

By DailyAlts Staff

Since receiving regulatory approval for the launch of its NextShares-branded exchange-traded managed funds ("ETMFs"), Eaton Vance has signed up numerous licensees but few distributors for the new products. That's because although ETMFs trade on an exchange like shares of stock or regular ETFs, they're not priced in "dollars and cents," but instead at a premium or discount to their net-asset value ("NAV"). Thus, an investor doesn't know for certain what price he or she has paid for shares of ETMFs until the market closes that day, at which point the ETMF's NAV is known.

Some Hurdles Yet to Overcome

This unusual pricing system requires brokers and other distributors to make technological upgrades in order to accommodate it, and thus far, few have been interested. But on August 18, Envestnet issued a press release announcing that it would make NextShares ETMFs available through its wealth-management platform, as part of its "advisor-as-portfolio-manager" tools and Fund Strategist Portfolios ("FSPs").

"Further expanding our FSP platform to include NextShares funds is a great demonstration of what we consider to be our central mission - helping financial advisors deliver high-quality, personalized, and holistic wealth management services in the most cost- and tax-efficient way possible," said Jim Patrick, Executive Vice President of Envestnet "As of June 30, 2015, our network services over 41,000 advisors, almost 3 million investor accounts, and over $700 billion in total client assets. We are delighted to play a role in supporting this groundbreaking fund structure."

Providing a Flexible Framework

Envestnet is working with Eaton Vance subsidiary Navigate Fund Solutions to integrate NextShares into Envestnet's platforms, technology systems, and processes, which will allow for NextShares' inclusion in Envestnet's portfolio model management tools. These tools provide financial advisors with "a flexible framework for portfolio construction" based on client risk tolerances, and include asset-allocation and product-selection tools, along with solutions for implementing, monitoring, and rebalancing across multiple investor accounts.

"NextShares are a new type of actively managed fund that includes the structural advantages of exchange-traded funds," said Navigate Fund Solutions President Stephen W. Clarke. "We are pleased to partner with Envestnet to incorporate NextShares into its portfolio model management tools, which further demonstrates its commitment to innovation."