Three exchange-traded funds (ETFs) based on the total return of short European credit derivatives index positions begin trading this week.The Deutsche Bank funds are structured as ETFs, although they will initially be available only through over-the-counter products. The bank said they would also be listed on Borsa Italiana by the end of the month.
The ETFs track the short total return iTraxx Europe, HiVol and Crossover five-year indexes, which were also released by the Frankfurt-based International Index Company (IIC) today. They aim to reflect the total returns from short positions in the three respective indexes of European credit default swaps. London-based data provider Markit will act as calculation agent for the indexes.
Deutsche Bank said the funds would provide a way for European investors to obtain credit protection in ETF format for the first time. It expects the funds, which are Ucits III compliant, to be popular with corporates, insurers and asset managers.
Both Deutsche Bank and BNP Paribas hold licences to operate ETFs based on the IIC’s other indexes.
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