Non-transparent ETF spreads are tighter than transparent ones

Non-transparent ETFs don’t disclose what they own. Market-makers have worked it out anyway

Blindfolded businessman

Market-makers are so good at pricing exchange-traded funds (ETFs) invested in US equities that they can still offer tight spreads when they don’t know what securities the fund is holding.

The average gap between prices to buy and sell actively managed non-transparent ETFs was 27 basis points on April 27, according to data from Bloomberg and ISS MI Simfund, a funds database. The average spread of 145 transparent ETFs invested in large and mid-cap US stocks was 33bp on the same day.

The active

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