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Semi-transparent ETFs are, quite simply, ETFs where you cannot see the holdings every day.
They don't exist today. One of them
has been approved by the SEC,
but it doesn't mean it's
out yet. And there are five others
coming out, potentially, if they
get approved by
the SEC. But in reality, all they are is
ETFs that do not disclose
holdings every single
day—like the ETFs do today.
Realistically, what they're trying to
accomplish with this is you'll be
able to bring forth
portfolios that you couldn't normally
do in today's structure. If you have
a concentrated
portfolio, or a portfolio where
there's a lot of trading, if you
get too large, you
may not be able to trade out of a
specific position that day.
If you're trading, someone can
actually see it in a transparent
structure. Let's use Apple
as an example. If it does from
3.5% to 2.75% to 2%, somebody could start front-running
your position. Well, in a semi-
transparent structure, if you don't disclose those holdings,
no one can see what the trading is.
And specifically in concentrated
portfolios, you have the ability
bring forth more alpha-generating
products, or your best ideas,
forward without fear of
someone seeing what you're doing
and what you're holding every
single day. That's why
they're different, and that's why
people want them to come out.