Active managers could benefit from the launch of new technology to facilitate the development of actively managed exchange-traded funds (ETFs), suggests a report from Moody’s Investors Service published on Thursday.

Last month Precidian Investments LLC filed its latest application for exemptive relief with the U.S. Securities and Exchange Commission (SEC) to be able to register its proprietary structure of active ETFs (ActiveShares), “which would enable active managers to use the ETF vehicle without disclosing the holdings of their funds’ portfolios,” the Moody’s report says.

Currently, the report says, most passive and active ETFs are required to make daily portfolio disclosure, which exposes active managers’ investment ideas to other investors.

As a result, most active ETFs (78%) are fixed-income vehicles, “since it is more challenging to emulate a fixed-income portfolio,” the report says.

Overall, active ETFs comprise just 1% of the ETF industry’s assets under management (AUM), according to the report.

Precidian’s approach is to hide an ETF’s holdings from the market by using a blind trust between the fund and the brokers that are entitled to trade large blocks of ETF shares with the fund’s “creation baskets,” Moody’s reports. With Activeshares, the report says, the “creation basket will only be disclosed to a representative (a custodial bank) that will manage the [blind trust].”

The ability to protect information about a fund’s holdings from the market could make actively managed ETFs a much more widely used product. Various firms have filed applications with the SEC to launch ETFs with the Precidian technology, including JPMorgan Asset Management, Blackrock, Inc., and Capital Research, the Moody’s report says.

Nationwide Investment Services Corp. is in negotiations to license Precidian’s structure, too, according to the report.

“The wider use of actively managed ETFs would be credit positive for active asset managers,” the report says; there is, “considerable opportunity for active managers to increase their share of the ETF market,” it adds.

“ETFs have been popular because they are efficiently traded, easily hedged and impose lower costs on investors,” the report says. “If active managers were to distribute their products in ETFs, their management fees would be under less pressure, allowing them to benefit from both increased volume and pricing.”