Black(B)rock (@BlackBrock) on getquin

5Mon·

SWAP-based or full replication for ETFs?

I am wavering between $XSXD (-0.22%) (Xtracker) or $IUSA (-0.22%) (Ishares). Both perform equally well (of course), both are distributing... The only difference is that the former is SWAP-based and the IShares ETF is not. The ETF from XTracker is about 0.5% cheaper for me.

I understand both types of replication, but I find a SWAP just as safe as a physical replication due to the hedging.

3 Comments

Kaffeetrinker@Kaffeetrinker

5Mon

Although swaps are hedged, the term "replication" does not apply to them.
Although swap-based ETFs are largely risk-free, they remain substantial derivatives.

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Mike U.@MikeUniverse

5Mon

In general, everyone has their preferences early or late.
Personally, I prefer to have real shares in the etf.

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Marcin Kummer@MartyMcFly

4Mon

Swapers perform minimally better than the "physical replicants" and the dividends are exempt from withholding tax, good alternatives are $SPXD and $LYPS

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