Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • newbinvestor
    • By newbinvestor 18th Jul 19, 3:01 PM
    • 70Posts
    • 8Thanks
    newbinvestor
    What are you views on Synthetic ETFs?
    • #1
    • 18th Jul 19, 3:01 PM
    What are you views on Synthetic ETFs? 18th Jul 19 at 3:01 PM
    That is one investment I wouldn't touch with a bargepole.
Page 2
    • londoninvestor
    • By londoninvestor 20th Jul 19, 5:15 PM
    • 1,224 Posts
    • 1,083 Thanks
    londoninvestor
    Not really, derivative positions are used to keep the fund fully invested when they are holding cash pending investing it. These positions won't generally be more than a few of percent of the fund, and will typically be sub-1%. As I said in a previous post "I don't take issue with a small amount of derivative on the side" and "this is still likely to result in a better outcome than if derivatives were never used, even if one day a counterparty should go bust and fail to meet their side of the bargain".
    Originally posted by masonic
    And typically these will be positions on major stock indexes: either futures on an exchange, or swaps with large counterparties that are required to have daily variation margin posted (under the rules that have been in place since 2016ish).

    Not something I lose sleep over as a small part of a fund.
    • tg99
    • By tg99 20th Jul 19, 9:40 PM
    • 755 Posts
    • 289 Thanks
    tg99
    And typically these will be positions on major stock indexes: either futures on an exchange, or swaps with large counterparties that are required to have daily variation margin posted (under the rules that have been in place since 2016ish).

    Not something I lose sleep over as a small part of a fund.
    Originally posted by londoninvestor
    Some may also use options and futures and other derivatives for risk management purposes, e.g. put option on FTSE 100 to provide some protection against downside risk. Would typically only be a v small part of the portfolio though and not particularly common. Some managers may also use currency forwards to hedge fx risk where they are taking off benchmark positions (e.g, UK fund with FTSE All Share benchmark whereby manager is permitted to invest up to 10% in overseas equities).
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,881Posts Today

8,304Users online

Martin's Twitter