The Semi-Transparent ETF Ecosystem

New approaches to ETF structures have received SEC approval, including semi-transparent ETFs. These new ETFs selectively disclose portfolio holdings information to the public on a schedule similar to traditional actively managed mutual funds while still striving to maintain market and NAV parity. This is accomplished through the use of alternative methods of signaling the value of an ETFs portfolio to the market.

Since actively managed ETFs seek to outperform a benchmark through security selection and innovative weighting schemes, many money managers have been reluctant to adopt the traditional ETF structure because it demands a transparency that could expose proprietary security selection and weighting methodologies to the public. Moreover, since most ETFs’ holdings are disclosed each trading day, and their rebalances occur on a regular basis, transparent ETFs open themselves up to “front running,” a scheme where traders bid up the price of an ETF’s underlying holdings with the foreknowledge that the ETF itself will need to purchase those shares for a rebalance.

For asset managers who wish to harness the advantages of the ETF structure –

including its tax efficiency and intraday tradability – but want to avoid some of its transparency pitfalls, semi-transparent ETFs may offer a solution. With a few minor exceptions, semi-transparent ETFs utilize all the same structures and relationships as fully transparent ETFs. They are mostly distinguished from fully transparent ETFs by the methods utilized to signal the value of the ETFs underlying portfolio.

Semi-transparent licensing models

The below table outlines the various semi-transparent solution licensing models that have received SEC approval and are available in the marketplace.

Ready to launch an ETF?

If you too are looking to launch an ETF, then download our guide below. We will walk you through everything you need to know to get started, including the differences between ETFs and other product offerings, startup costs, necessary service providers, and how to gain assets via distribution.

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How we help

If you are ready to launch an ETF, then contact us today to get started.

Year-over-year, the most well-known global wealth and asset managers continue to choose ACA Foreside to help expand and support their product line up of ETFs. In 2023, our specialists partnered with more than half of the ETF launches in the U.S., and we support 1,000+ ETFs distributed across 275 managers. 

We work with asset management firms throughout the world to facilitate compliance and product distribution through legal underwriting, registered rep licensing and chaperoning, and DTCC/NSCC fund sponsorship. We have experience working with all types of pooled investment vehicles, such as traditional mutual funds, ETFs, alternative products, closed-end interval funds, and private placements.

Once launched, we can further support you with our broad range of advisory, managed services, and regulatory technology solutions, to help you grow and protect your business, while also addressing your compliance, ESG, investment performance, and cybersecurity challenges.