Lyxor ETF
Why would you choose to trade a Lyxor ETF? Sounds like a strange question? Well, it isn’t. There are major differences between one ETF and another and also between ETF providers you will find important variations in market approach. Here we will discuss the pros and cons of Lyxor ETF’s.
Pros of Lyxor ETF
Being one of the leading ETF providers in the world and especially in Europe, it is obvious that Lyxor offers more pros than cons to the average ETF investor.
1. A European provider of ETF’s
Being a European ETF investor myself I always have a sweet spot for EU based providers. But without being sentimental I prefer to diversify my investments and that also goes for choosing ETF providers. The leading ETF providers are American providers such as iShares, SPDR and Vanguard. With Lyxor ETF you can add an important European (French) ETF provider and that really makes sense.
2. Leading in European market sector ETF’s
Lyxor offers many ETF’s focused on European market sectors. You can pick ETF’s targeted at European sectors such as Food & Beverages, European Retail, Telecommunications, Financial Services and a lot more specific European market sectors. For me that is a real plus when you want to invest in European market sectors.
3. Lyxor ETF trades in Euro’s
Especially when you are an ETF investor from a European country it is a real advantage to trade in Euro’s on European exchanges. Most Lyxor ETF’s are traded in one or more European exchanges making it easy to get in and out of trades without currency concerns.
4. Well-balanced ETF’s
The physical ETF’s from Lyxor are well-balanced in weighing. As you know weighing within an ETF is an important factor. You do not want a single underlying asset or stock to outweigh the other assets in that same ETF. Weighing is something you must take care of when creating the ETF.
It also has implications in physical ETF’s as you will have to buy the underlying assets. As an ETF provider buying underlying assets may be more difficult to manage with more assets included in the ETF.
So it really is an advantage for your customers when you try to balance the ETF as best as you can while sometimes making life more difficult for yourself as an ETF provider. With Lyxor ETF they are doing a pretty good job in most cases.
Cons of Lyxor ETF
All in all I am very positive about Lyxor ETF but there are some minor and major concerns I will have to mention.
1. Lyxor ETF is creating more and more synthetic ETF’s
Being at the forefront of market developments sometimes has some downsides. I myself am not a big fan of synthetic ETF’s due to a lack of transparency and the accompanied higher potential risk. Lyxor ETF however is creating more and more synthetic ETF’s.
Today almost 50% of all managed ETF’s are synthetic and they really are aiming at increasing this share. I do not like this development but fortunately Lyxor is still going strong in physical ETF’s and I only included the physical ETF’s within my preferred list of 137 ETF’s.
2. Strong in Europe but much weaker in other markets
If you want to have a global approach to investing you must look at other ETF providers. That is no problem at all, it only will tell you that you must follow ETF’s from other global players too. Especially in emerging markets and in commodities Lyxor does not offer as many choices as you would like to see. Again, this is no major concern as others do provide these ETF’s.
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