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Portfolio > ETFs

Interactive Brokers Offers Free Trading on Leveraged FactorShares ETFs

By Joyce Hanson

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Interactive Brokers announced Wednesday commission-free trading of five Factor Advisors LLC exchange traded funds on the brokerage’s Trader Workstation platform. 

The commission-free trades apply to the first FactorShares group of spread ETFs, which launched in February:

  • FactorShares 2X: S&P500 Bull/TBond Bear    (NYSE Arca: FSE)
  • FactorShares 2X: TBond Bull/S&P500 Bear    (NYSE Arca: FSA)
  • FactorShares 2X: S&P500 Bull/USD Bear       (NYSE Arca: FSU)
  • FactorShares 2X: Oil Bull/S&P500 Bear          (NYSE Arca: FOL)
  • FactorShares 2X: Gold Bull/S&P500 Bear       (NYSE Arca: FSG)

“FactorShares offers our clients a streamlined, cost-effective approach to spread trading,” said Thomas Peterffy, CEO of Interactive Brokers, in a statement. “With one commission-free trade, our clients can now access the daily spread between major asset classes within a single ETF position.”

Interactive Brokers has agreed to waive flat-rate and cost-plus brokerage commissions for transactions in FactorShares ETFs and will not impose short-term trading fees.

The Greenwich, Conn.-based firm is an automated global electronic market maker and broker specializing in routing orders and executing and processing trades in securities, futures, foreign exchange instruments, bonds and funds on more than 90 electronic exchanges and trading venues around the world.

“Interactive Brokers will help place the FactorShares spread ETFs in front of their savvy brokerage clients, alerting them to this new approach to alternative ETF investing,” said Factor Advisors Chairman Karlheinz Muhr in a statement. “We are pleased Interactive Brokers agreed to promote commission-free trading of FactorShares with no minimum holding period and no short-term trading fees.”

Factor Advisors is a New York-based asset management firm that focuses on spread trading strategies.

The firm touts FactorShares as “the first family of spread ETFs,” which enables investors to track two market segments, one long and one short, “in one convenient and cost-effective position.” In addition to Interactive Brokers, other firms involved in the development and offering of FactorShares are Standard & Poor’s and State Street Bank.

The FactorShares spread ETFs are designed to rebalance daily to achieve the desired effect of maintaining dollar neutrality.

FactorShares ETFs target a daily leverage ratio of 4:1, where each dollar invested provides approximately two dollars of long futures exposure and two dollars of short futures exposure, immediately after daily rebalancing.

FactorShares ETFs aim for daily investment results and are not designed to be held for longer periods, according to the company.

The funds charge annual expenses of 0.75 percent.

Read more about the launch of the FactorShares ETFs at AdvisorOne.com.

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