New iShares ETFs Use Swap-Based Strategy

New funds increase competition, complexity

The Financial Times reported Friday, Sept. 24, that several players in the exchange-traded funds market launched new funds with an eye to increasing competitiveness.

On Sept. 19, iShares launched a swap-based ETF platform in London, the Times writes. The firm will use Royal Bank of Scotland, UBS and Credit Suisse as counterparties rather than depending on one bank to ensure investors are paid.

Two funds using this strategy have been launched so far, according to the Times. The iShares MSCI Russia Capped Swap ETF, which has an expense ratio of 0.74%; and the iShares S&P CNX Nifty India Swap ETF, which has an expense ratio of 0.85%.

Lyxor, a division of Soci?t? G?n?rale, launched five swap-based ETFs, the Times reports. The funds are the first to track sectors based in Asia, although they exclude Japan. Soci?t? G?n?rale will serve as counterparty for the funds. The funds will track the consumer staples, financials, infrastructure, technology and materials sectors, according to the Times, and have an expense ratio of 0.65%.

Earlier this month, Credit Suisse launched 45 swap-based and physically-backed ETFs on the London Stock Exchange, the Times reports.

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