Synthetic ETFs providing better investor protection

Since 2011, synthetic ETFs - which mimic the behaviour of exchange traded funds through the use of derivatives -  have been at the subject to high-profile risk warnings from the likes of the International Monetary Fund, Financial Stability Board, the Bank for International Settlements and the Financial Services Authority. According to the report, ETFs Under the Microscope, which analyses synthetic ETFs in Europe, Asia, Australia and Canada, a large majority of synthetic ETFs worldwide are subject to regulation that limits the amount of counterparty exposure to any single issuer via a der...