Does anyone invest in any ‘synthetic’ ETFs?
I’m looking for a well priced NASDAQ ETF. The best i’ve found is XNAQ.L at 0.20% and is a ‘synthetic ETF’. I have researched about them and the risks seem low… but would welcome experience from others… or if anyone knows of a well priced NASDAQ ETF (under 0.30%)
Thanks
I tend to avoid them though not for any especially good reason other than that I can buy full physical replication of the S&P dirt cheap.
As I understand it, synthetic ETFs should outperform slightly due to lower costs, use of swaps, tax treatment, less tracking error etc.
Yes, there’s counterparty risk but you can make a case that similar risks exist for many other ETFs due to share lending.
That said, JustETF suggests XNAQ uses physical replication while the Invesco one, EQSG, is synthetic.
With the ongoing costs of both listed at 0.20% and XNAQ being physical and bigger, I’d favour that one.
I’ve never quite understood why Nasdaq 100 trackers are so much more expensive. Anyone know?
Ignoring the UBS ETF at 0.13% which is tiny at £1m, we’re talking 0.20% versus 0.03%.
Thanks topher - really appreciate your thoughts on this.
I’m not sure why i posted XNAQ as synthetic… i meant to post UBNS as synthetic.