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FAQs
- Who is ETF Securities (ETFS)?
- What is ETF Exchange?
- What are Exchange Traded Funds (ETFs)?
- How do I buy and sell an ETF?
- Who is the Issuer?
- How are ETFs priced and where is the information published?
- Do ETFs make dividend payments?
- How can you ensure the tracking error remains minimal?
- How is liquidity provided?
- What is the credit risk for investors?
- What would happen if ETF Securities were to go bankrupt?
- Are ETFs eligible investments for ISAs, SIPPs and CTFs?
- Are there any other costs besides Management Fees?
- Can investors lose money?
- Are ETFs subject to Stamp Duty or Stamp Duty Reserve Tax?
- Do ETFs hold UK distributor status?
- Are there other tax considerations for investors?
- What is the difference between ETFs and traditional index tracking funds?
- Are ETFs covered by the FSA compensation scheme?
- Who regulates ETF Securities and ETFs?
1. Who is ETF Securities (ETFS)?
ETF Securities is the pioneer and leader in Exchange Traded Commodities (ETCs). The management of ETF Securities Limited created the world's first ETC in 2003 - Gold Bullion Securities in Australia and London which now has approximately US$2 billion in assets. In 2005, ETF Securities created the world's first oil ETC and then in 2006 ETF Securities created the world's first ETC platform on the London Stock Exchange, making available 19 commodities and 10 indices. In 2007, ETF Securities created the world's first physically backed precious metals ETC platform, making available platinum and palladium for the first time ever. ETF Securities has most recently launched the largest platform of thematic sector ETFs in Europe providing exposure to European firsts such as Coal, Steel, Shipping and Nuclear Power
Now investors can trade all the world's major commodities on the same exchange and in the same time zone.
2. What is ETF Exchange?
ETF Exchange is the world’s first 3rd Generation ETF Platform offering investor’s access to low cost swap backed ETFs with credit diversification across a number of participants rather than reliance on a single bank. As the banks, APs and market makers compete for business, true liquidity and competition is created.
ETF Securities is working with: Bank of America Merrill Lynch, Citi, and Rabobank International who are participants on the platform, acting as distribution partners, authorised participants and swap providers.
To find out more about ETFX Partners click here.
3. What are Exchange Traded Funds (ETFs)?
ETFs are low cost, transparent, index tracking funds which trade on regulated stock exchanges. ETFs enable investors to gain exposure to well known equity indices or sectors in one trade as easily as buying any ordinary share. ETFS branded ETFs are UCITS III funds that are designed to accurately track the underlying index.
4. How do I buy and sell an ETF?
Investors can buy and sell ETFs throughout the trading day on regulated stock exchanges through ordinary brokerage accounts.
5. Who is the Issuer?
The Issuer is ETFS Fund Company plc, which is an Irish domiciled open-ended investment company having segregated liability between its sub-funds and is authorised by the Irish Financial Regulator as a UCITS.
6. How are ETFs priced and where is the information published?
ETFS’ range of ETFs is priced off the underlying equity index which they are designed to track. They have a Net Asset Value which is calculated once a day. More information on pricing of ETFs is available on the ETF Securities website.
7. Do ETFs make dividend payments?
ETFS’ range of ETFs do not pay dividends to investors. Any income received by the funds in the form of dividends is reinvested in the fund.
8. How can you ensure the tracking error remains minimal?
ETFs are open-ended funds, and therefore Authorised Participants (who are generally investment banks) can create or redeem ETFs at their underlying value or NAV. This helps to ensure that the funds price does not trade at a premium or discount to the NAV.
9. How is liquidity provided?
ETFs are open-ended, therefore new ETFs can be created by Authorised Participants according to demand. Therefore, the liquidity of an ETF reflects the liquidity of the relevant underlying equities.
10. What is the credit risk for investors?
The fund structure is very robust and complies with UCITS III regulations and there is segregated liability between the assets of each sub-fund. The majority of the funds exposure is to short maturity securities from very high quality issuers. The index management is effected through collateralised swap contracts provided by multiple counterparties. This ensures that the ultimate risk to investors is minimal.
11. What would happen if ETF Securities were to go bankrupt?
If in the unlikely situation ETF Securities were to go bankrupt, this would not affect the value of the ETFs. Each ETFs is a standalone fund whose assets are segregated for investor's safety. ETF Securities does not hold any investor money - all cash and exposure management is outsourced to highly rated third party providers.
12. Are ETFs eligible investments for ISAs, SIPPs and CTFs?
All ETFS-branded ETFs are eligible investments for ISAs, SIPPs and CTFs.
13. Are there any other costs besides Management Fees?
No, although your broker or financial advisor will also charge you normal transactions costs (commissions) associated with the purchase or sale of ETFs.
14. Can investors lose money?
The price of ETFs can go up or down with the market, however investors cannot lose more than the amount of the initial investment.
15. Are ETFs subject to Stamp Duty or Stamp Duty Reserve Tax?
ETFS-branded ETFs are not subject to Stamp Duty or Stamp Duty Reserve Tax.
16. Do ETFs hold UK distributor status?
ETFS branded ETFs will seek to achieve UK distributor status
17. Are there other tax considerations for investors?
Investors should consult their own professional advisers as to the implications of their subscribing for, purchasing, holding, switching or disposing of ETCs under the laws of the jurisdiction in which they may be subject to tax. Tax legislation may change.
18. What is the difference between ETFs and traditional index tracking funds?
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ETF |
Index Tracker |
| Exchange Traded |
Yes |
No |
| Intra day dealing |
Yes |
No |
| Low cost |
Yes |
Can be very high |
| Forward priced |
No |
Yes |
| Transparent |
Yes |
Yes |
| Stamp Duty (UK) |
No |
Yes |
| Dealing costs |
No |
Can be very high |
| Buy and sell through any broker |
Yes |
No |
| Range of exposures |
Very large |
Normally limited to large equity markets |
19. Are ETFs covered by the FSA compensation scheme?
ETFs are covered by the FSA compensation scheme.
20. Who regulates ETF Securities and ETFs?
ETF Securities is incorporated in Jersey and regulated by the Jersey Financial Services Commission.
ETF Securities range of ETFs are domiciled in Ireland and authorised by the Financial Regulator in Ireland (IFSRA).
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