db-X-trackers FTSE 100 ETF's use of swap replication has resulted in a fairly close tracking error on a year-by-year basis; this builds up to a total tracking error of just 1.01 per cent between the ETF's launch in June 2007 and the end of March 2011
This compares favourably with rival FTSE 100 trackers. Taking an example of a tracker fund that buys the shares, the iShares FTSE 100 also tracks closely on a yearly basis, but over three years has a tracking error of 1.13 per cent, and over five years 2.32 per cent. Its total expense ratio (TER) at 0.4 per cent is also more expensive than db X-trackers' 0.3 per cent.
Another rival is open-ended tracker fund HSBC FTSE 100 Index, which has an even lower TER at 0.27 per cent. However, over three and five years this fund lags the FTSE 100 by 3.1 and 6.9 per cent.
db X-trackers FTSE 100 ETF only has one swap counterparty, the fund manager's parent company Deutsche Bank, which has a credit ratings of Aa3 and A+ from Moody's and Standard & Poor's - at the higher end of the spectrum. The fund is over-collateralised by 7.24 per cent, so could easily cover its assets if Deutsche Bank did default.
db X-trackers publishes what this collateral is on its website on a daily basis. As at 27 April, this was around 90 per cent equities from developed markets, with more than two-thirds listed in Germany, and 10 per cent investment-grade bonds, in line with db X-trackers' policy of only holding securities of this quality. It had 75 securities in total.
db X-trackers FTSE 100 ETF is seeking distributor status, which when obtained means you will pay capital gains tax when you sell your shares rather than income tax.
|db X-trackers FTSE 100 ETF (XUKX)|
|ASSETS UNDER MANAGEMENT:||£468.5m||1-YEAR PERFORMANCE:||5.69%|
|LAUNCH DATE:||5 June 2007||3-YEAR PERFORMANCE:||0.28%|
|INDEX:||FTSE 100||TOTAL EXPENSE RATIO:||0.30%|
|LEGAL STRUCTURE:||Ucits III||TRACKING ERROR SINCE LAUNCH:||1.01%|
|BASE CURRENCY:||Sterling||MORE DETAILS:||etf.db.com/uk|
Source: db X-trackers.
Performance data as at 27 April 2011.
Top 10 reference index holdings as at 31 March 2011
|Royal Dutch Shell 'A'||5.16|
|Royal Dutch Shell 'B'||3.96|
|British American Tobacco||3.26|
|Oil & gas||20.16|
|Personal & household goods||6.35|
|Food & beverage||5.50|
|Industrial goods & services||4.73|
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