ETF structure determines suitability for investors

The firm's head of Northern Europe Eleanor Hope-Bell says synthetic ETFs are a more complex structure and therefore retail investors may prefer the more simplistic physically replicated funds.  She also points to the FSA's recent discussion paper Product Intervention, which suggested that leveraged ETFs are "generally unsuitable for the mainstream retail market". Funds that use a swap agreement instead of physically replicating their underlying index rely on a third-party to provide benchmark returns, opening up the possibility of the counterparty defaulting. Hope-Bell says: "It's ...