Synthetic ETF

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Dictionary Says

Definition of 'Synthetic ETF'

An investment that mimics the behavior of an exchange-traded fund (ETF) through the use of derivatives such as swaps. Proponents of synthetic ETFS say they do a more accurate job of tracking indexes; critics say that synthetic ETFs face counterparty risk, are not transparent and may mislead investors. Other variations on the plain vanilla ETF include currency ETFs, inverse ETFs, international ETFs, leveraged ETFs and ultra ETFs.
Investopedia Says

Investopedia explains 'Synthetic ETF'

Synthetic ETFs are common on the Hong Kong Stock Exchange, which differentiates them from traditional ETFs by placing an “X” in front of their names. The country’s financial regulators, concerned about whether investors are financially sophisticated enough to understand the different characteristics and risk profiles of synthetic ETFs, have subjected synthetic ETFs to greater scrutiny and imposed additional requirements on the institutions that issue them. Synthetic ETFs have faced similar issues in European markets.
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'Synthetic ETF'

  • Synthetic Options Provide Real Advantages

    http://www.investopedia.com/articles/optioninvestor/08/synthetic-options.asp
    ... When done right, synthetic options have the ability to do just that: They can simplify
    your trading decisions, make your ... Dissecting Leveraged ETF Returns. ...

  • Get Into Low-Cost Futures Trading With Synthetics

    http://www.investopedia.com/articles/optioninvestor/08/synthetic-futures.asp
    ... That's where the concept of synthetic futures comes in. ... With synthetic futures as
    with everything else, there is still plenty of opportunity for loss. ...

  • Put-Call Parity And Arbitrage Opportunity

    http://www.investopedia.com/articles/optioninvestor/05/011905.asp
    ... Arbitrage strategies are not a useful source of profits for the average trader,
    but knowing how synthetic relationships work ... Dissecting Leveraged ETF Returns. ...

  • Mutual Funds Vs. ETFs: A Comparison - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/0112/Mutual-Funds-Vs.-ETFs-A-Comparison.aspx
    ... and funds of funds (an ETF pursuing a strategy by investing in other ETFs). Some
    go further out along the risk continuum with the advent of synthetic ETFs, for ...

  • Investing In The Metals Markets

    http://www.investopedia.com/articles/stocks/11/how-to-invest-in-the-periodic-table.asp
    ... elements, including 94 naturally occurring elements and 24 synthetic elements
    artificially ... on aluminum, zinc and copper; SPDR Metals & Mining ETF (NYSE:XME ...

  • Uncovering Hidden Debt

    http://www.investopedia.com/articles/stocks/04/102004.asp
    ... operating leases. Synthetic Leases Building or buying an office building
    can load up a company's debt on the balance sheet. A lot ...

  • Get Positive Results With Negative Basis Trades

    http://www.investopedia.com/articles/trading/08/negative-basis-trades.asp
    ... Fixed-income participants refer to the CDS portion of a negative basis trade as
    synthetic (because CDSs are derivatives), and the bond portion as cash. ...

  • Practical And Affordable Hedging Strategies

    http://www.investopedia.com/articles/optioninvestor/07/affordable-hedging.asp
    ... IWM is the Russell 2000 tracker ETF. ... This is very useful in conjunction with risky
    leveraged investments like index futures or synthetic stock positions. ...

  • Principal-Protected Notes: Hedge Funds For Everyday Investors

    http://www.investopedia.com/articles/bonds/07/principal_protected.asp
    ... May 29 2010 | Filed Under ยป Bonds, Hedge Funds, Options. A principal-protected note
    (PPN) is a synthetic investment or structured product that creates a ...

  • Top 8 Ways Companies Cook The Books

    http://www.investopedia.com/articles/analyst/071502.asp
    ... investors. Synthetic Leases A synthetic lease can be used to keep the cost
    of new building from appearing on a company's balance sheet. ...

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