Opacity is an asset class.

Prior to the formation of the Transparency Label Initiative, opacity was an unrecognized asset class.  There was no way for investors to distinguish between transparent and opaque investments.  This was particularly true when investors were hiring money managers who claimed to be experts in valuing opaque securities.

With the Transparency Label Initiative, this has changed.  Investors can know make an informed decision on how much exposure they want to transparent securities where they can know what they own and how much exposure, if any, they want to opaque securities where they are blindly betting.

The fact an investor can know what they own doesn’t mean they will do the homework necessary to know what they own.  It is the investor’s choice.

However, investors are nudged to choose doing the homework necessary to know what they own.  Buyer beware provides this nudge as investors know they are responsible for all losses on their investment exposures.  Hence, investors have an incentive to know what they own.