Nontransparent Active ETFs

ETFs are known for their transparency, with portfolio holdings that are disclosed in real time every day. Nontransparent active ETFs seek to keep the secret sauce of many portfolio managers secret by disclosing portfolio holdings only periodically. These proposed ETFs work either by introducing a “trusted agent” in the process who would create/redeem shares through confidential accounts for the APs, or by using proxy portfolios that don’t represent the entire basket in an effort to keep holdings secret. It has long been said that transparency has kept many active fund managers away from the ETF market, so the argument goes that a nontransparent wrapper could revolutionize the space.