Best of Both Worlds: An Introduction to Semi-Transparent Active ETFs

The launch of the first semi-transparent ETFs is one of the most anticipated financial innovations in decades. With the launch of American Century Investments new strategies, that anticipation is over. In this upcoming webcast, American Century Investments and ETF Trends will outline this ETF revolution, and show how financial advisors can access active equity strategies from seasoned money managers in an ETF wrapper for the first time.

April 21, 2020
11am PT | 2pm ET
1 CE Credit
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Dave Nadig, CIO of ETF Trends and ETF Database will be moderating this discussion on:

  • How semi-transparent ETF strategies differ from old-model actively managed ETFs
  • The nuts and bolts of how American Century's semi-transparent ETF strategies work
  • Where financial advisors can incorporate semi-transparent strategies into a diversified investment portfolio

NOT accepted for one hour of CFP/CIMA CE credit for live and on-demand attendees

CFA Institute members are encouraged to self-document their continuing professional development activities in their online CE tracker.


Edward Rosenberg

Head of Exchange Traded Funds
American Century Investments

Sandra Testani, CFA, CAIA

Director of Product Management - Alternatives and ETFs
American Century Investments

Matt Lewis

Vice President, Head of ETF Implementation and Capital Markets
American Century Investments

Dave Nadig

CIO, Director of Research
ETF Trends and ETF Database

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Important Disclosures

This ETF is different from traditional ETFs.  

Traditional ETFs tell the public what assets they hold each day. This ETF will not. This may create additional risks for your investment.  Specifically:

  • – You may have to pay more money to trade the ETF’s shares.  This ETF will provide less information to traders, who tend to charge more for trades when they have less information.  
  • – The price you pay to buy ETF shares on an exchange may not match the value of the ETF’s portfolio. The same is true when you sell shares. These price differences may be greater for this ETF compared to other ETFs because it provides less information to traders.  
  • – These additional risks may be even greater in bad or uncertain market conditions.  

The differences between this ETF and other ETFs may also have advantages. By keeping certain information about the ETF secret, this ETF may face less risk that other traders can predict or copy its investment strategy. This may improve the ETF’s performance. If other traders are able to copy or predict the ETF’s investment strategy, however, this may hurt the ETF’s performance.

You should consider the fund’s investment objectives, risks, charges and expenses carefully before you invest. The fund’s prospectus or summary prospectus, which can be obtained by visiting Avantisinvestors.com or by calling 833-928-2684; for American Century products visit americancentury.com. This document contains this and other information about the fund and should be read carefully before investing.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results. 

The fund is an actively managed ETF that does not seek to replicate the performance of a specified index.

This fund may invest in a limited number of companies, which carries more risk because changes in the value of a single company may have a more significant effect, either negative or positive on the fund’s value.  

Because the shares are traded in the secondary market, a broker may charge a commission to execute a transaction in shares, and an investor also may incur the cost of the spread between the price at which a dealer will buy shares and the somewhat higher price at which a dealer will sell shares.

The Verified Intraday Indicative Value – Unlike traditional ETFs, the fund does not tell the public what assets it holds each day.  Instead, the fund provides a verified intraday indicative value (VIIV), calculated and disseminated every second throughout the trading day by the Cboe BZX Exchange, Inc. (Listing Exchange) or by market data vendors or other information providers.  It is available on websites that publish updated market quotations during the trading day, by searching for the fund’s ticker plus the extension .IV, though some websites require more unique extensions.  For example, the VIIV can be found on Yahoo Finance (https://finance.yahoo.com) by typing “^FLV-IV” (for Focused Large Cap Value ETF) or “^FDG-IV” (for Focused Dynamic Growth ETF) in the search box labeled “Quote Lookup.”  The VIIV is based on the current market value of the securities in the fund’s portfolio on that day.  The VIIV is intended to provide investors and other market participants with a highly correlated per share value of the underlying portfolio that can be compared to the current market price.  To calculate the VIIV, the fund employs two separate calculation engines to provide two independently calculated sources of intraday indicative values (calculation engines). The fund then uses a pricing verification agent to continuously compare the data from both the calculations engines on a real time basis.  If during the process of real time price verification, the indicative values from the calculation engines differ by more than 25 basis points for 60 consecutive seconds, the pricing verification agent will alert the advisor, and the advisor will request that the Listing Exchange halt trading of the fund’s shares until the two indicative values come back into line.  This “circuit breaker” is designed to prevent the VIIV from reflecting outlier prices.  The specific methodology for calculating the fund’s VIIV is available on the fund’s website.

Portfolio Transparency Risk – The VIIV is intended to provide investors with enough information to allow for an effective arbitrage mechanism that will keep the market price of the fund’s shares trading at or close to the underlying net asset value (NAV) per share of the fund.  There is, however, a risk, which may increase during periods of market disruption or volatility, that market prices will vary significantly from the underlying NAV of the fund.  Similarly, because the fund’s shares trade on the basis of a published VIIV, they may trade at a wider bid/ask spread than shares of ETFs that publish their portfolios on a daily basis, especially during periods of market disruption or volatility, and therefore, may cost investors more to trade.  Although the fund seeks to benefit from keeping its portfolio information secret, some market participants may attempt to use the VIIV to identify the fund’s trading strategy, which if successful, could result in such market participants engaging in certain predatory trading practices that may have the potential to harm the fund and its shareholders. The fund’s website will contain a historical comparison of each business day’s final VIIV to that business day’s NAV. 

Early Close / Trading Halt Risk – Trading in fund shares on the Listing Exchange may be halted in certain circumstances.  An exchange or market may close early or issue trading halts on portfolio securities.   In times of market volatility, if trading is halted in some of the securities that the fund holds, there may be a disconnect between the market price of those securities and the market price of the fund.  In addition, if at any time the securities representing 10% or more of the fund’s portfolio become subject to a trading halt or otherwise do not have readily available market quotations, the fund’s advisor will request the Listing Exchange to halt trading on the fund, meaning that investors would not be able to trade their shares.  Also, if there is a circuit breaker event, as described above, the fund’s advisor will request the Listing Exchange to halt trading.  During any such trading halt, the VIIV would continue to be calculated and disseminated. Trading halts may have a greater impact on the fund than traditional ETFs because of its lack of transparency.  Additionally, the fund’s advisor monitors the bid and ask quotations for the securities the fund holds, and, if it determines that such a security does not have readily available market quotations (such as during an extended trading halt), it will post that fact and the name and weighting of that security in the fund’s VIIV calculation on the fund’s web site. This information should permit market participants to calculate the effect of that security on the VIIV calculation, determine their own fair value of the disclosed portfolio security, and better judge the accuracy of that day’s VIIV for the fund.   An extended trading halt in a portfolio security could exacerbate discrepancies between the VIIV and the fund’s NAV

Authorized Participant / Authorized Participant Representative Concentration Risk – The fund issues and redeems shares that have been aggregated into blocks of 5000 shares or multiples thereof (Creation Units) to authorized participants who have entered into agreements with the fund’s distributor. (Authorized Participants). The creation and redemption process for the fund occurs through a confidential brokerage account (Confidential Account) with an agent, called an AP Representative, on behalf of an Authorized Participant. Each day, the AP Representative will be given the names and quantities of the securities to be deposited, in the case of a creation, or redeemed, in the case of a redemption (Creation Basket), allowing the AP Representative to buy and sell positions in the portfolio securities to permit creations or redemptions on the Authorized Participant’s behalf, without disclosing the information to the Authorized Participant. The fund may have a limited number of institutions that act as Authorized Participants and AP Representatives, none of which are obligated to engage in creation or redemption transactions. To the extent that these institutions exit the business or are unable to proceed with creation and/or redemption orders with respect to the fund and no other Authorized Participant is able to step forward to process creation and/or redemption orders, fund shares may trade at a discount to NAV and possibly face trading halts and/or delisting. This risk may be more pronounced in volatile markets, potentially where there are significant redemptions in ETFs generally. The fact that the fund is offering a novel and unique structure may affect the number of entities willing to act as Authorized Participants and AP Representatives. During times of market stress, Authorized Participants may be more likely to step away from this type of ETF than a traditional ETF.


Foreside Fund Services, LLC, distributor, not affiliated with American Century Investment Services, Inc. 


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