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Synthetic ETFs seem no different from synthetic CDOs . Quite scary; isn’t it.
Would be interesting to see if there is a synthetic Gold ETF where it doesn’t own any physical gold at all. But investors who invest may think they are buying and owning gold.
ReplySender,
Yes. It is possible that just like CDOs, synthetic ETFs could be one vehicle for institutions to spin off some of their toxic assets as the underlying collaterals.
ReplyMartin,
yea. european banks could well be packaging all their toxic investments (including bonds from greece, ireland, portugal, spain, italy, etc) into some kinds of synthetic ETFs. Then, sell it to gullible investors elsewhere as synthetic ETFs.
Glad you brought this matter to our attention. Time to warn our friends and relatives to steer clear from them. Hope it isn’t another minibonds saga in the brewing. If so, the culprit next time likely is SGX that will be in hot soup.
ReplyTotally agree with you here;
I have been looking keenly at first at the ETF launched in Singapore as a way to invest elsewhere to the tiny island.
But las!, all I have seen are synthetic; and the culprit here has been Deutshe Bank. launching new synthetic products every other week.
I know that SGX is trying to gain volume, but this is not good.
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