Hot trade lead Sell ›› Ferro-Nickel ingots Free registration | Login
Our Metals
Bookmark and Share English Russian Turkish
About CTN Centre Career & jobs Advertising Contact us
Become a member today for:
  • Trade leads submission
  • Entry in directory
  • Brand promotion
  • Network opportunity
  • Newsletter subscription

Synthetic ETFs vs. physical ETFs

Post a trade lead

Become a member

forex trade

An index fund replicates an existing index, such as the DAX. A DAX ETF thus reflects the 30 securities it contains one-to-one. ETFs are used as investment vehicles by robo-advisors or ETF savings plans, for example.

The money in the ETF is then used to collectively buy those securities and, depending on the amount paid in by the investor, the shares are distributed. This makes it possible to diversify broadly even with a small investment volume.

These types of ETFs are called real or physical ETFs because the purchase actually takes place.

Synthetic ETFs as a second type of exchange traded fund

A second type of ETF, on the other hand, are synthetic ETFs. Although these also reflect performance and thus enable the same return, synthetic ETFs often do not contain the products to be tracked. How can this be?

A synthetic ETF agrees a swap transaction (total return swap) with a financial institution (swap counterparty). For this purpose, a contract is concluded which agrees to pay the ETF the index return including all dividend payments in return for a fee.

The fee comes from the investors, who also pay an annual fee for asset management when using a robo-advisor. The big banks have better and more efficient access to the respective markets. Thus, they are more cost-effective and can process the trades cheaply for a fee or enable the synthetic ETF.

Such ETFs are also called swap ETFs. For the investor, the return in the end is the same as if the index were actually tracked. For the provider of a synthetic ETF, too, the handling can bring tax advantages as well as cost savings, since there is less effort to actually buy in all securities.


Synthetic ETF - But only a contract and not a fund?

Now one could assume that the synthetic ETF is correctly not a fund at all, but merely a contract? No, because the synthetic ETF still receives money from the investors. This money is then invested in a collateral portfolio and pays the fee in return for receiving the return from a third party.

In addition to the fee paid to the swap counterparty (the financial institution that pays the return and dividend), the swap counterparty also receives the returns from the collateral portfolio. The portfolio is used to hedge the swap transaction.

The securities in the collateral portfolio do not have to correspond to the securities of the index to be tracked. Thus it can happen that a synthetic ETF that tracks the DAX contains securities from Japan or other countries. The investor in mt4 Exness nevertheless receives the return, as this is realised via the swap transaction with a financial institution.

If the ETF holds the collateral portfolio itself, the ETF is also called an unfunded swap. If the collateral portfolio is held in trust with a third party, the ETF is called a funded swap.

In any case, the collateral portfolio should be looked at. Good ETF providers are transparent so that investors can see the collateral portfolio with all its securities. Unfortunately, investors usually only find out this information upon request.

Liteiniye Zavodi (buy: 0 & sell: 4)

Selling lead - High & low pressure casting of non-ferrous alloys High & low pressure casting of non-ferrous alloys
No Trustpass
Selling lead - Ni-resist cast iron Ni-resist cast iron
No Trustpass
1. Selling lead - PPGI coil from India. PPGI coil from India. No Trustpass
2. Selling lead - Aluzinc coil from India Aluzinc coil from India No Trustpass
3. Selling lead -  chequered Plates from India. chequered Plates from India. No Trustpass
4. Selling lead - CRFH coils CRFH coils No Trustpass
5. Selling lead - CRCA coils from India CRCA coils from India No Trustpass
6. Buying lead - Round steel billets Round steel billets No Trustpass
7. Selling lead - Cement offer Cement offer No Trustpass
8. Selling lead - Sell of gold Sell of gold No Trustpass
9. Selling lead - IRON ORE IRON ORE No Trustpass
10. Buying lead - hms,plates sheets,ship building materials, hms,plates sheets,ship building materials, No Trustpass
11. Selling lead - Titanium Bars and Rods Titanium Bars and Rods No Trustpass
12. Buying lead - Hot rolled coil Hot rolled coil No Trustpass
13. Selling lead - Reinforcing Steel Bars Reinforcing Steel Bars No Trustpass
14. Buying lead - Ferro-silicon 45 Ferro-silicon 45 No Trustpass
15. Selling lead - Titanium tube Titanium tube No Trustpass
16. Selling lead - Cast steel check valves: swing disc Cast steel check valves: swing disc No Trustpass
17. Selling lead - Cast steel globe valves: plug disc Cast steel globe valves: plug disc No Trustpass
18. Selling lead - Cast steel gate valves: wedge disc Cast steel gate valves: wedge disc No Trustpass
19. Selling lead - Glacial acetic acid Glacial acetic acid No Trustpass
20. Selling lead - Rutile titanium dioxide Rutile titanium dioxide No Trustpass

››››  Would you like Our Metals to help you buy/sell a product, find a reliable partner or develop new markets? Learn more!  ‹‹‹‹

Select all 1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 10 »

Disclamer: Our trading platform is designed to promote trade by bringing buyers and sellers (suppliers) together using the Internet. assumes no liability for errors, omissions and/or misinterpretations pertaining to listings. assumes no responsibility for any and all details, agreements, and terms between the buyer and seller of materials listed in the Exchange. reserves the right to exclude any or all listing submissions.

5 most recent members

No. Company name Trustpass Buy Sell Status
1. SBR Co.
No Trustpass
0 0
2. TCT Trade International LLC
No Trustpass
1 0
3. Maroo Steels
No Trustpass
0 5
4. Sunder Coal Suppliers
No Trustpass
0 0
5. K-Metals Ltd
No Trustpass
0 0

Search leads & companies

Hot company Company

SEKOM Handelsges.m.b.H....
Our company is a private firm founded in 1990 with aim to develop export and import with Russia. We do promote EU industrial and consumer goods in Russia and strongly support marketing of Russian and CIS industrial products and services.
0 selling & 0 buying leads

Upcoming events

Human Resources
25 September 2013, Istanbul
Marriott Asia Hotel
Future of Commercial Vehicles
26 September 2013, Istanbul
Marriott Asia Hotel

Friendly links

CTN Events calendar
  - Market research
- Surveys & interviews
- Client/partner search
- Market reports
  - Event management
- Conferences
- Trade missions
- Corporate meetings
- Incentives & rewards
- Team building
- Product launches
- Private parties
  - Steel products
- Cement products
- Building materials
- Raw materials
- Retail
- Chemicals
- Fertilizers
- Food products
  - Consultancy
- Marketing support
- Import/export agent
- Tender coordination
- Web development
- Graphic design
- Language translation
- Legal & tax services
  - Turkey, Russia, EU
- Import/export delivery
- Customs clearance
- Warehousing
- Cargo insurance
- Cargo security
- Project management