They are structured as open-end funds which are domiciled and registered in many countries. The assets of ETFs are held by custodians in a ring-fenced structure.
Most ETFs purchase the underlying securities in the index with the majority fully replicating their underlying index; many have the capacity to employ optimisation and sampling techniques. These ETFs may exclude certain securities and deviate from their benchmark constituent weights, which could lead to tracking error.
The week on Risk.net, October 6-12, 2017Receive this by email
- SGX, HKEX expect to be among first wave of Mifid II equivalence
- Quantile, TriOptima face off in cleared swaps compression battle
- Leaked EU doc could shield legacy swaps from clearing grab
- ABS set for revival under US Treasury’s liquidity buffer plans
- Quants stymied by lack of alternative risk premia flows data