Are synthetic ETFs making a comeback?

Are synthetic ETFs making a comeback?

ETF Launches and Updates


Amundi expanded its responsible investment range with the launch of two ESG ETFs offering exposure to global and emerging markets – the Amundi MSCI Emerging ESG Universal Select UCITS ETF DR (C), TER 0.20% and the Amundi MSCI World Climate Paris Aligned PAB UCITS ETF, TER 0.25%. Link


HANetf launched the Almalia Sanlam Active Shariah Global Equity UCITS ETF (ticker: AMAL), the world’s first active global equity Shariah-compliant ETF. The fund has launched on London Stock Exchange and will be listing on Deutsche Boerse and Borsa Italiana in early October.


Causing quite a stir this week, iShares launched synthetic based S&P 500 ETF offering investors access to the US index via a swap-backed product. The iShares S&P 500 Swap UCITS ETF is available on Euronext, London Stock Exchange and Xetra for a total expense ratio of 0.07%. Link


Lyxor has reduced the total expense ratio (TER) of the Lyxor Nasdaq 100 UCITS ETF (NASL) from 0.3% to 0.22%. Link


Vanguard dropped the DAX index on its Germany ETF in favour of a far broader exposure covering the entire market cap. The Vanguard Germany All Cap UCITS ETF (VGER), will now track the FTSE Germany All Cap index. Link


WisdomTree is planning to change the underlying indices for five currency hedged funds and six leveraged and inverse funds, including the $224.9m WisdomTree WTI Crude Oil 2x Daily Leveraged ETF. Link

Flows and Performance


Emerging market ETFs see inflows as investors hunt for greater yield. According to data from Ultumus, two of the top 10 European-listed ETFs to see the most inflows in the week to 25 September were emerging market strategies.

The $6.1bn iShares J.P. Morgan EM Local Govt Bond UCITS ETF (IEML) and the $298m iShares MSCI EM ESG Enhanced UCITS ETF (EDM2) saw inflows of $328m and $139m, respectively. Meanwhile, there were also strong inflows for the $3bn Xtrackers MSCI Emerging Markets UCITS ETF (XMME) with investors pouring $120m in the same week. Link




Synthetic ETFs see resurgence as investors reap outperformance rewards. Synthetic ETFs offering exposure to US and global equities have outperformed their physical counterparts this year as investors begin to turn back to the swap-based structure.

According to research conducted by Invesco, the firm’s synthetically replicated S&P 500, the Invesco MSCI USA UCITS ETF (MXUS) and Invesco MSCI World UCITS ETF (MXWO) outperformed the average of their largest physical competitors by 0.24%, 0.31% and 0.12%, respectively, over the past year, as at the end of August. Link


Launching more ESG ETFs and expanding expanding into new countries are the two key priorities for ETF issuers in Europe over the next two years, according to research conducted by Cerulli Associates.

The research, which surveyed 37 European ETF issuers with $832bn assets under management (AUM), found 57% of respondents cited expanding their ESG ranges as a “high priority”, the highest factor highlighted in a  survey.

ESG ETFs in Europe have exploded over the past two years with assets reaching $41.1bn by the end of May, up 28% from the end of 2019.

According to data from Morningstar, there were a record 46 ESG ETF launches in Europe in the first half of the year, 11 more than the previous highest for an entire year set in 2018. Link

Traditional socially responsible ETFs that rely on simply excluding “sin stocks” such as coal mining or tobacco look set to become a thing of the past. Instead, investors are leaning towards so-called positive screening approaches that choose best-in-class companies which score high on specific environmental, social and governance performance criteria. Link

At the recent Morningstar Investment Conference, BlackRock chief executive Larry Fink said: “The fixed income market will be substantially more of an ETF market in the future.” In recent years, more money has been flowing into ETFs that track various baskets of US bonds than equities.


The process of buying and selling an ETF is smoother and faster than transacting in cash bonds and that has transformed fixed income trading in recent years. Currently, actively managed bond ETFs represent nearly one-tenth of the $1tn market, according to

Among net inflows this year of $152bn into fixed income ETFs, 13.4 per cent — or $20.4bn — has been garnered by the actively managed bond sector. Link


ETF Express publishes US ETF Awards and winners list for 2020. Link