Tracking Products

 Tracking Products aim to replicate the performance of an Underlying Asset such as an equity index, selection of stocks, physical commodity or a commodity index on a one-for-one basis (i.e. no leverage). As such, they are typically used as a cost-efficient tool for investors to diversify a portfolio into new markets or strategies.

As a tracking product, replication strategies have the same risk / reward profile as a direct investment in the underlying assets. However, capital is at risk and the investor does not acquire an interest in the underlying asset.  

Lyxor Exchange Traded Funds

Lyxor Exchange Traded Funds (ETFs) are open-ended funds that aim to replicate the performance of a diversified index (composed of at least 5 assets) as closely as possible. Lyxor ETFs track their indices through the use of a swap contract to replicate the performance of the index. The main advantage of an ETF in comparison to an Exchange Trade Note or Tracker is that counterparty risk is limited to 10% of the investment.

Exchange Traded Notes & Trackers

Exchange Traded Notes (ETNs) & Trackers are particularly useful for investors with a specific view on a single underlying or commodity. A key advantage of many ETNs comes from the ‘Quanto’ feature which can eliminate the currency risk of investing in an underlying asset which quotes in a currency different to that of the ETN. Unlike the Lyxor ETFs however, ETNs & Trackers have full credit risk to Société Générale. Trackers are Securitised Derivatives whereas ETNs are Notes.

Costs and fees

The costs for ETFs are an annual management fee (Total Expense Ratio or TER) and commissions paid to the intermediary to buy or sell Lyxor ETF units like a share.  In the case of ETNs, the Quanto fees (for the currency protection feature) are disclosed on this website on a daily basis on each individual ETN page.

LYXOR ETFs - Access the range

KEY BENEFITS KEY RISKS

Liquidity:
Exchange traded, live intraday bid/offer spread        

Capital at Risk:
When the performance of the underlying is negative 
and/or in case of default of the issuer

Transparency:
Live pricing on the LSE

Counterparty Risk:
Investors are exposed to risks resulting from the use of an OTC swap with Société Générale. In-line with UCITs guidelines, the exposure to Société Générale cannot exceed 10% of the total fund assets.

Cost Efficiency:
Low Total Expense Ratio (TER) - comprises of management fee and structural costs

Underlying Risk:
The Underlying may be volatile

Eligibility:
SIPP, ISA, CGT, UCITS III Funds 

Currency Risk:
When the underlying quotes in a foreign currency

ETNS/ TRACKERS  - Access the range
KEY BENEFITS KEY RISKS

Liquidity:
Exchange traded, live intraday bid/offer spread

Capital at Risk:
When the value of the underlying falls and/or in case of default of the issuer

Transparency:
Live pricing on the LSE

Counterparty Risk:
The investor bears a full SG credit risk

Cost Efficiency:
Low management fees and daily Quanto fees

Underlying Risk:
The underlying may be volatile

Currency Hedge:
Currency protection available where the 
underlying and product quote in different currencies

Eligibility:
SIPP, ISA, SSAS, CGT

version : 4.38.0-SNAPSHOT