Credit Suisse to convert seven ETFs from synthetic to physical

Mar 26th, 2012 | By | Category: Equities

Credit Suisse has announced that it will be converting seven CS ETFs from synthetically to physically-replicating funds.

Credit Suisse to convert seven ETFs from synthetic to physical

Credit Suisse is set to convert seven ETFs from a synthetic swap-based structure to the traditional physical cash-based structure.

In November 2011, four Credit Suisse ETFs were converted from a synthetic to a physical-replication method. Since then, according to a statement, the bank has monitored the remaining synthetic CS ETFs for opportunities to convert to a physical structure.

With this second wave of conversions, set to occur between 30 April and 10 May 2012, Credit Suisse hopes to position itself as one of the leading providers of physically-replicating ETFs in Europe.

The move clearly demonstrates Credit Suisse’s preference for physical replication over swap-based, or synthetic, replication. Credit Suisse will, however, continue to use synthetic replication when access to indices is not otherwise accessible.

In certain markets swap-based replication can deliver better value in terms of TER, trading cost and liquidity.

The funds affected are (date of conversion):

CS ETF (IE) on MSCI Korea (30 April 2012)

CS ETF (IE) on MSCI Taiwan (30 April 2012)

CS ETF (IE) on MSCI World (9 May 2012)

CS ETF (IE) on MSCI EM Asia (10 May 2012)

CS ETF (IE) on MSCI EM Latin America (10 May 2012)

CS ETF (IE) on MSCI Chile (10 May 2012)

CS ETF (IE) on MSCI Russia (10 May 2012)

As a result of the conversion, the CS ETF (IE) on MSCI Russia will experience a change in the reference index it tracks. From 10 May 2012 and subject to shareholder approval, this fund will track the MSCI Russia ADR/GDR Index Net USD, and its name will be changed to CS ETF (IE) on MSCI Russia ADR/GDR to reflect this.

The conversions will not impact the Total Expense Ratio (TER) of the funds.

Investors who agree to the changes are not required to take any action. Investors who do not wish to participate in the move to physical replication may submit sell orders to their broker no later than one business day prior to the conversion date of the respective ETF.

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