Defiance files for first private company ETF using swaps

Defiance has filed paperwork with regulators to launch the first exchange traded fund focused entirely on private companies. Instead of buying shares directly, the fund plans to use swap agreements to track the performance of private firms. This approach could open up a new asset class for retail traders who usually cannot buy shares in private startups before they go public.

While the product creates fresh opportunities, industry watchers are pointing out potential downsides. Using swaps means investors face counterparty risk if the trading partners fail to deliver. Valuation transparency is another concern because private companies do not price their shares daily like public stocks do, making it harder to track the exact value of the fund at any given moment.

Regulators still need to review and approve the filing before the fund can launch. If successful, this product might change how traditional investment funds approach private markets. Traders should watch for SEC feedback and updates on how the fund plans to handle pricing and risk management.