BOSTON –- The Securities and Exchange Commission may be nearing a milestone —issuing recommendations allowing for the first actively managed exchange-traded funds.

The Wall Street Journal quoted a lawyer in the agency's division of investment management who said the SEC may "in the near future" make recommendations concerning actively managed ETFs.

ETFs are currently considered one of Wall Street's hottest investments. Total assets invested in domestic ETFs increased 38 percent in 2006 to $417 billion, and 156 new ETFs were brought to market, according to State Street Global Advisors.

Many industry observers have predicted 2007 would be the year the ETF marketplace sees its first truly actively managed products, said MarketWatch. More firms entering the ETF business are launching products on increasingly complex indexes that already incorporate elements of active portfolio management.

In 2001, the SEC issued a "concept release" seeing comment on actively management ETFs. If the SEC gives its nod of approval, firms are reportedly developing what would be the first active ETFs.

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A spokesperson for the American Stock Exchange said the AMEX owns patents on models for active ETFs with multiple patents pending.

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