One thing to know about ETF share prices—whether active or passive—is that they are driven by two factors: the net asset value (NAV) of the underlying shares, but also by demand for the ETF shares. Imbalances in supply and demand can produce sharp departures from NAV, though discrepancies tend to get traded away fairly quickly.
How quickly, though, is partly a function of portfolio transparency. Given those SEC rules on index-ETF disclosure, you might think they would be more transparent than active ETFs. Not only do active managers have more time to trade before disclosure, but they have an incentive to keep their trades quiet. Exposing trades invites "front-running" by investors who pick up on a savvy manager's longer-term strategy and trade on it before the manager does, compromising the strategy.
But it's not clear that actives are the more opaque. Index Universe's Hougan notes that what index ETFs disclose every day is actually a "creation basket" of securities—those an ETF receives in order to create new ETF shares. This is usually the same as actual holdings, but not necessarily, particularly for small funds holding illiquid assets, where the difference between the creation basket and actual holdings can become significant.
Most ETFs are fully transparent, providing their complete holdings on a daily basis. Others, not so much. Vanguard, for example, posts full holdings every 90 days, with a 30-day lag.
Vanguard spokesman John Woerth says the company's disclosure practice "strikes the appropriate balance between investor utility and protection," and notes that Vanguard posts top-10 holdings monthly, with a lag of 10 business days.
Several other big fund providers, including iShares provider BlackRock, are seeking SEC permission to offer ETFs with less than full, daily disclosure.