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11/07/2018 13:33:35
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Börse Frankfurt News

How to read ETF names



At first glance, the names appear long and bulky, but behind the text tapeworms lie details of the ETFs, which investors can translate quickly with a little practice. This makes it easier to find the right ETF.
11 July 2018. FRANKFURT (Börse Frankfurt). The ETF name tells you a lot about what type of ETF it is. Some are simple, such as the ComStage DAX UCITS ETF, while some make it sound more complicated, such as the iShares Core MSCI World UCITS ETF USD (Acc). With a little knowhow, it is not difficult to decode such terms.

ETF names usually consist of three or four components:

  • underlying index
  • regulatory information
  • information of the unit class


First: ETF issuer

The ETF issuer is named first, such as iShares, Xtrackers or Lyxor.



Second: Underlying index

In second position is the underlying index, for example DAX, Euro Stoxx 50 or iBoxx Euro Germany 1-3. The index name usually indicates the asset class and country/region.

In addition, it is sometimes also stated whether one is dealing with a performance index or a price index. A performance index includes changes in capital and dividend payments (TR = Total Return, GR = Gross Return). In contrast, NR (Net Return) or TNR (Total Net Return) means that the net dividends/ net interest are taken into account after deduction of withholding taxes when calculating the index.

Third: Regulatory information

Thirdly, there are regulatory references. All ETFs listed on the Frankfurt Stock Exchange are so-called UCITS ETFs, which is cited in the name of the ETF. UCITS means that the ETF complies with the UCITS rules of the EU ("Undertakings for Collective Investments in Transferable Securities"). These serve to protect investors and determine in which assets and financial instruments a fund company may invest. For example, a maximum of 20 percent of ETF assets may flow into a particular security. In addition, swap-based ETFs may only account for 10 percent of fund assets.

This is followed by the term "ETF". This distinguishes the ETF from similar products: ETCs (Exchange Traded Commodities), ETNs (Exchange Traded Notes) and ETPs (Exchange Traded Products, a generic term). An important difference between ETFs on the one hand and ETCs and ETNs on the other is: ETFs are a special fund and are not part of the bankruptcy assets if the custodian bank/fund company goes into liquidation.

Fourth: Possible additional information

In part, further designations follow in fourth place:

  • USD, CHF, GBP etc.: If the ETF is denominated in a currency other than the euro, such as the US dollar (USD), Swiss franc (CHF) or British pound (GBP), this is included in the ETF name.
  • If you want to avoid exchange rate risks, you should pay attention to currency hedging. "Daily hedged" or "Monthly hedged" means that the currency hedging is adjusted daily or monthly.
  • C, Acc, D, Dis, Dist describe the use of profits. As it is the case with actively managed funds, income in the form of dividends or interest can be either retained or distributed with ETFs: Acc ("accumulating"), distributing with D, or Dis, or Dist ("distributing").
  • DR: The type of replication, i.e. whether it is a physically replicating or swap-based ETF, is rarely mentioned. "DR" stands for direct replication.
  • DE etc.: The ETF domicile is also rarely mentioned. Since it can have tax advantages if the domicile is in Germany, some providers list it, but there is no standardised description: iShares uses (DE) in the fund name, ComStage uses "1".
  • Short/2x/Double/3x etc..: These terms make it clear that this is not a simple reflection of the index. "Short" means that the ETF reflects the development of the index inverse. These ETFs can be used if falling prices are expected. Note: In the case of bonds, short can also mean that short-term bonds are mapped.
  • 2x, Double, 3x: The development of the index is shown twice or three times.
  • 1c, 2c etc: These abbreviations describe share classes: A fund may have several unit classes, which may differ in terms of currency, fees or the way in which income is used. The names are not standardised; details can be found in the fund prospectus.


Examples

ComStage DAX UCITS ETF: an ETF from Comstage that reflects the DAX and is UCITS-compliant.

iShares Core MSCI World UCITS ETF USD (Acc): an ETF from iShares that reflects the MSCI World index in US dollars. The ETF is UCITS-compliant and reinvests earnings. ("Core" is a company-specific name for iShares: The Core series consists of twelve popular equity and bond ETFs that can be used as central investment modules.)

iShares EURO STOXX 50 UCITS ETF (DE): an ETF of iShares that represents the Euro Stoxx 50. It is UCITS-compliant and domiciled in Germany.

ComStage Commerzbank Bund-Future Double Short UCITS ETF: A UCITS-compliant ETF from Comstage that reflects the development on the Bund future inverse and with leverage 2.

iShares Euro Corp Bond ex-Financials 1-5yr UCITS ETF (Dist): a UCITS-compliant ETF from iShares that reflects the performance of the "Euro Corporate Bond ex-Financials 1-5yr" index and which distributes profits.



Anna-Maria Borse
11 July 2018, © Deutsche Börse

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