Systems and methods for converting closed-end funds to actively managed exchange traded funds

• US 20050262010A1
• Filed: 05/20/2005
• Published: 11/24/2005
• Est. Priority Date: 05/21/2004
• Status: Abandoned Application

• Current Assignee: NYSE American LLC (Intercontinental Exchange, Inc.)
• Original Assignee: American Stock Exchange, LLC (Intercontinental Exchange, Inc.)
• Inventors: Rzepski, Thomas, Tull, Robert Stanley Jr.
• Application Number:
  US11/133,441
• Publication Number:
  US 20050262010A1
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

The present invention relates generally to systems and methods for eliminating the premium or discount and providing liquidity and growth potential through new investments in closed-end funds. The systems and methods of the invention provide means for converting shares of closed-end funds into shares of actively managed exchange-traded funds. NAV estimates and hedging portfolios are provided for the actively managed exchange traded fund shares that provide more up-to-date information on which investors may base negotiated prices.

Claims

1. A method for converting a closed-end fund into an exchange traded fund, comprising:

including in the governing documents or amending the governing documents to include a provision for converting the closed-end flud into an actively managed exchange traded fund if shares of the closed-end fund trade at a price of a predetermined amount greater than or less than the net asset value of the closed-end fund;

determining that shares of the closed-end flud trade at a price of a predetermined amount greater than or less than the net asset value of the closed-end fund;

converting at least a portion of the shares of the closed-end fund into shares of an actively managed exchange traded fund; and

using a computer means to calculate an estimated value of the actively managed exchange traded fund, wherein the estimated value of the actively managed exchange traded fund is calculated without publicizing the portfolio of the actively managed exchange traded fund.

2. The method of claim 1 wherein the estimated value is calculated periodically throughout a trading period and further comprising the step of publicizing the estimated value periodically throughout the trading period.

3. The method of claim 2, further comprising the step of using a computer means to determine a hedging portfolio for hedging a position taken in the actively managed exchange traded fund, wherein the hedging portfolio is determined without publicizing the portfolio of the exchange traded fund.

4. A method for converting a closed-end fund into an exchange traded fund, comprising:

including in the governing documents or amending the governing documents to include a provision for converting the closed-end fund into an actively managed exchange traded fund if shares of the closed-end fund trade at a price greater than or less than the net asset value of the closed-end fund for a predetermined amount of time;

determining that shares of the closed-end fund have traded at a price greater than or less than the net asset value of the closed-end fund for the predetermined amount of time;

converting at least a portion of the shares of the closed-end fund into shares of an actively managed exchange traded fund; and

using a computer means to calculate an estimated value of the actively managed exchange traded fund, wherein the estimated value of the actively managed exchange traded fund is calculated without publicizing the portfolio of the actively managed exchange traded fund.

5. The method of claim 4 wherein the estimated value is calculated periodically throughout a trading period and further comprising the step of publicizing the estimated value periodically throughout the trading period.

6. The method of claim 5, further comprising the step of using a computer means to determine a hedging portfolio for hedging a position taken in the actively managed exchange traded fund, wherein the hedging portfolio is determined without publicizing the portfolio of the exchange traded fund.

7. A method for converting a closed-end fund into an exchange traded fund, comprising:

including in the governing documents or amending the governing documents to include a provision for converting the closed-end fund into an actively managed exchange traded fund if shares of the closed-end fund trade at a price of a predetermined amount greater than or less than the net asset value of the closed-end fund for a predetermined amount of time;

determining that shares of the closed-end fund have traded at a price of the predetermined amount greater than or less than the net asset value of the closed-end fund for the predetermined amount of time;

converting at least a portion of the shares of the closed-end fund into shares of an actively managed exchange traded fund; and

using a computer means to calculate an estimated value of the actively managed exchange traded fund, wherein the estimated value of the actively managed exchange traded fund is calculated without publicizing the portfolio of the actively managed exchange traded fund.

8. The method of claim 7 wherein the estimated value is calculated periodically throughout a trading period and further comprising the step of publicizing the estimated value periodically throughout the trading period.

9. The method of claim 8, further comprising the step of using a computer means to determine a hedging portfolio for hedging a position taken in the actively managed exchange traded fund, wherein the hedging portfolio is determined without publicizing the portfolio of the exchange traded fund.

10. A computer means for providing net asset value estimates of shares of actively managed exchange traded funds, wherein the shares of actively managed exchange traded funds have been converted from shares of closed-end funds, the computer means comprising hardware for executing software commands to calculate an estimated value of the actively managed exchange traded fund without publicizing the portfolio of the actively managed exchange traded fund.

11. The computer means of claim 10, wherein the computer means further executes software commands for calculating the estimated value throughout a trading period and publicizing the estimated value periodically throughout the trading period.

12. The computer means of claim 11, wherein the computer means further executes software commands for determining a hedging portfolio for hedging a position taken in the actively managed exchange traded fund, wherein the hedging portfolio is determined without publicizing the portfolio of the exchange traded fund.

13. A data storage device storing software, the software having instructions for causing computer means to calculate an estimated value of the actively managed exchange traded fund without publicizing the portfolio of the actively managed exchange traded fund, wherein the shares of the actively managed exchange traded fund have been converted from shares of a closed-end fund.

14. The data storage device of claim 13, the software further having instructions for calculating the estimated value throughout a trading period and publicizing the estimated value periodically throughout the trading period.

15. The data storage device of claim 14, the software further having instructions for determining a hedging portfolio for hedging a position taken in the actively managed exchange traded fund, wherein the hedging portfolio is determined without publicizing the portfolio of the exchange traded fund.

16. A method for converting a closed-end fund into an exchange traded fund, comprising:

amending the governing documents of the closed-end fund to include a provision for converting the closed-end fund into an actively managed exchange traded fund if a predetermined and disclosed criterion is satisfied;

determining that the predetermined and disclosed criterion is satisfied;

converting at least a portion of the shares of the closed-end fund into shares of an actively managed exchange traded fund; and

using a computer means to calculate an estimated value of the actively managed exchange traded fund, wherein the estimated value of the actively managed exchange traded fund is calculated without publicizing the portfolio of the actively managed exchange traded fund.

17. The method of claim 16, wherein the predetermined and disclosed criterion is that shares of the closed-end fund trade at a price of a predetermined amount greater than or less than the net asset value of the closed-end fund.

18. The method of claim 16, wherein the predetermined and disclosed criterion is that shares of the closed-end fund have traded at a price greater than or less than the net asset value of the closed-end fund for a predetermined amount of time.

19. The method of claim 16, wherein the predetermined and disclosed criterion is that shares of the closed-end fund have traded at a predetermined amount grater than or less than the net asset value of the closed-end fund for a predetermined amount of time.

20. The method of claim 16, wherein the predetermined and disclosed criterion is that the board or shareholders decide to convert at least a portion of the shares of the closed-end fund into shares of an actively managed exchange traded fund.

21. A method comprising:

including in the governing documents of a closed-end fund or amending the governing documents of a closed-end fund to include a provision for converting the closed-end fund into an actively managed exchange traded fund if a predetermined and disclosed criterion is satisfied;

determining whether the predetermined and disclosed criterion is satisfied; and

if the predetermined and disclosed criterion is satisfied, converting at least a portion of the shares of the closed-end fund into shares of an actively managed exchange traded fund; and

using a computer means to calculate an estimated value of the actively managed exchange traded fund, wherein the estimated value of the actively managed exchange traded fund is calculated without publicizing the portfolio of the actively managed exchange traded fund.