But, wait. What does that do for the cost of these funds and the transparency?
The answer is that it remains to be seen. The transparency issue in particular has been a big concern of the Securities and Exchange Commission (SEC). If there’s a fund manager doing the homework and actively managed ETFs are totally transparent, there’s nothing to stop investors from playing along. The prices of those securities could be affected, and they would get the benefits of the manager’s research without the cost.
One solution that’s been offered is to release daily holding information, as opposed to mutual funds, which report their holdings typically either monthly or quarterly.
Another key difference between active ETFs and mutual funds is the way they trade. Mutual funds trade once a day, at the end of the day. All ETFs can trade at any time, just like stocks.