State Street Global Advisors has joined the race to launch an actively managed equity exchange-traded fund. The company filed an exemptive relief request with the Securities and Exchange Commission today for the right to launch a family of nine actively managed target date ETFs.

“It’s going to be a fund-of-funds and hold other ETFs,” said Jim Ross, senior managing director at State Street. “The active element is the asset allocation strategy.”

 The funds can also hold cash and interest-bearing securities, as well as derivatives. Funds will be available with target dates of 2010, 2015, 2020, 2025, 2030, 2035, 2040, 2045 and "Retirement Income."

The "ETF of ETFs" structure is a good fit for an active ETF because it allows SSgA to sidestep the entire issue of transparency. The big holdup in the race to launch an actively managed equity ETF is that most active managers do not want to disclose their portfolios, for fear that hedge funds and other fast-traders will "leapfrog" their trades and "front-run" their investments.

But with an ETF of ETFs structure, that doesn't matter. You can't really drive up the price of an ETF artificially, as it's simply reflective of the underlying securities.

Moreover, trades will only be disclosed after settlement, which is to say, the day after the trades are made ... giving a window for any trades to be completed before front-running could occur.

“We have no concerns about transparency issues with these products,” Ross said. “This is something we think dovetails what can be done in the active space today with ETFs.”

"It is widely recognized that the common denominator in the success of ETFs is the transparency of each ETF's portfolio," the filing reads. "Applicants believe that the transparency of each New Fund will be at least equal to that of the Current Funds and other index-based ETFs."

The funds will not track an index, so there is no intraday indicative value. However, SSgA will publish a NAV on a 15-second basis based on the values of the underlying funds and securities.

The new funds will rebalance annually. If they launch, they will represent the second family of target date ETFs, joining the TDAX Funds from Xshares and TD Ameritrade. Those five funds launched last year and have approximately $140 million in assets.

The new SSgA products aren't the first "fund of ETFs" products. There are a number of mutual funds, separately managed accounts and variable insurance trusts that make use of ETFs to build portfolios, including for target date funds. However, the SSgA funds would be the first to package other ETFs into a tradable ETF package, with the attendant benefits and downsides of that wrapper.