Their names may sound like those of two generic index funds, but the two new ETFs from Barclays Global Investors' iShares unit are anything but that. iShares Active Equity Fund and the iShares Active Fixed Income Fund are the latest two offerings from the San Francisco-based market share leader in exchange-traded funds. Each of the two will be actively managed.

BGI iShares filed on May 4 with the SEC to register the funds (see filing). Because of the uniqueness of the filing -- each ETF is examined independently -- it is not clear how long the SEC will take to approve the registration.

A BGI iShares executive involved in the filing suggested that the actual launch of the ETFs may be a long way off and that it is not imminent.

The filing did not list projected expense ratios but it did reveal that Barclays Global Fund Advisors will serve as the advisor to the two ETFs and SEI Investments Distribution Co. is the distributor.

In an interview with the MFWire.com last week, Noel Archard, managing director and head of product research and development, said that iShares has a strong partner in its still-sister asset management firm Barclays Global Investors and that BGI is its first stop in seeking subadvisors.

He did not rule out the use of third-party subadvisors once the sale of the iShares unit is complete.

Last month, Barclays unveiled a plan to sell iShares to Blue Sparkle, a limited partnership formed by private equity firm CVC Capital Partners for $4.4 billion (see MFWire 4/09/09). Barclays is soliciting other bids until mid-June.

Archard downplayed the strategic importance of active ETFs, but he did explain some of their potential benefits to investors. One key advantage over actively-managed, open-end funds would be tax efficiency, he said. That efficiency is best seen cases in which an investor moves shares between broker-dealers. ETFs have the portability of regular shares while some funds would have to be sold and re-bought as a part of the transfer.

"The unsung attribute of the ETF is the portability," said Archard.

He also pointed to the potential liquidity created by the create and redeem feature used in the share creation for ETFs.

One aspect of active management that iShares is not exploiting with the new ETFs is using branding to sell shares. Neither fund has a catchy name and iShares is not leveraging "star power" from famous subadvisors. That decision fits with the iShares culture though.

Archard explained that active ETFs from iShares will mesh with the firm's broader culture and will not be created just for the sake of creating active ETFs.

"It has to be true to the iShares DNA at the end of the day," he confided.  

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