SWX Launches New Product Segment For ETSFs

by Phillip Morton, Investors Offshore.com

27 November 2007

The SWX Swiss Exchange has launched a new segment for exchange traded structured funds (ETSFs), which, according to the exchange, combine the investment flexibility of structured products with the legal security provided by investment funds.

In contrast to ETFs, which track a specific index, ETSFs involve a traditional investment instrument that is combined with a derivative or baskets of underlying instruments from various asset classes, such as shares, bonds or commodities. Depending on how the fund’s assets are structured, it is possible to participate in the underlying instrument(s), optimise yield, or protect the invested capital.

According to the SWX, private and institutional investors will benefit from the advantages of both investment vehicles.

For ETSFs, market makers will be engaged to post firm quotes and ensure an orderly market. ETSFs will be traded directly on the high-capacity transaction platform, 'Quote System.'

The first three funds were listed on SWX by Bank Vontobel AG, and commenced trading on 26 November. They are based on a quantitative dynamic strategy focused on European or, as it were, American stocks.

Alain Picard, Product Manager for ETFs & Other Financial Products, SWX Swiss Exchange/virt-x explained that: “The design possibilities for ETSFs are multifaceted and we are anxious to see how this segment develops in the future. We would like to extend a warm welcome to Bank Vontobel AG, the first issuer and market maker for ETSFs on SWX."

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