12. Juni 2023
Xtrackers’ guide to Synthetic Replication
Investor demand has continued to drive growth in the synthetic ETF market in Europe this year. The widespread adoption of ETFs has led to a surge in investors looking to adopt synthetic ETFs as cost-effective tools to access a variety of different investment exposures. Despite their growing popularity, there is a misconception that synthetic ETFs are perceived as a more challenging structure to comprehend. To help investors better understand the replication method, we revisit the key differences between physical and synthetic replication whilst using case studies to highlight the benefits of synthetic replication and make it more tangible for investors. The final section of the paper addresses concerns investors might have, potential risks and how they are mitigated.