Exchange traded funds are known for their transparency, disclosing underlying holdings on a daily basis. However, Vanguard Group does not publish its daily underlying components.

Unlike other fund providers, Vanguard reveals its stock ETF holdings at the month end, with a 15-day lag, reports Jonathan Burton for the Wall Street Journal. [Vanguard ETFs Eschew Daily Disclosure]

Doug Yones, head of Vanguard’s domestic equity indexing and ETF product management, argues that it is in the interest of the shareholders for the ETF sponsor to keep more tight lipped about its ETF holdings as it helps prevent so-called front-running and free riding.

Specifically, traders could jump ahead of larges-scale buying and selling when ETFs disclose holdings on a daily basis. As an index is reconfigured or rebalanced, the changes can affect the share price of constituents.  Meanwhile, in free-riding, market players would capitalize on the institutional trading.

“Front-running and free-riding are real costs,” Yones said in the article. “Everything we do is in the interest of the holder of the fund.”

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