DIY Investor Magazine
/
Jan 2017
8
Dominique Riedl, CEO justETF
HOW TO EASILY DECIPHER ETF NAMES
ETF names can look complicated, but you’ll soon
decode them with our handy guide.
One of the longest ETF names in the justETF
database is the UBS ETF (LU) Barclays MSCI US
Liquid Corporates Sustainable UCITS ETF (hedged
to EUR) A-acc; nearly a tweet’s worth of terms and
abbreviations!
Cryptic names can be off-putting, but they are usually
based on a simple logic that can help you understand
whether an ETF is right for you; once you know how to
read ETF names you’ll be able to target your searches
more quickly.
ETF names consist of five components
An ETF name is built from keywords that reveal the
product’s most important features. The basic structure
usually looks like this:
The keywords may occur in a different order, or
individual components may be missed out, but the
principle remains the same; some real-life examples of
ETF names help explain what the keywords tell you.
1. Provider: Who issued the ETF?
The ETF provider’s brand name usually comes first –
e.g.
iShares
Core FTSE 100 UCITS ETF (Dist). ETF
providers are commonly subsidiaries of large banks or
asset managers - iShares is part of the world’s largest
asset manager, BlackRock, while db X-trackers is the
ETF brand of Deutsche Bank.
A sub-brand, like
Core
in the example above, shows
that the ETF is part of a sub-group in the provider’s
product range; terms like Core are worth looking out for
because these products are usually very cost-effective
and generally based around key portfolio building
blocks like the FTSE 100 or MSCI World index.
2. Index: Where do you invest?
The second component is the index that the ETF
tracks - iShares Core
FTSE 100
UCITS ETF (Dist).
vendors such as MSCI, FTSE and S&P provide
independent verification of the indexes and licence them
to the ETF providers.
Often the index name reflects the region as well as
the number of stocks tracked and it pays to be aware;
the EURO STOXX 50 tracks the 50 largest companies
traded within the
Eurozone
, whereas the STOXX
Europe
600 is broader and includes Switzerland
and the UK. You may also see an index with a suffix
such as
NR
(Net Return),
TR
(Total Return) or
TRN
(Total Return Net); this tells you whether the index
performance is calculated before or after withholding
taxes on dividends, but it has no direct impact on the
performance of the ETF itself which will distribute any
dividends you are entitled to.
3. Regulatory information: Important for consumer
protection
Always look for the words UCITS in your ETF name -
iShares Core FTSE 100
UCITS
ETF (Dist). This means
the ETF is subject to European regulations specifically
designed to protect private investors. UCITS ETFs
must meet certain standards such as not holding more
than 20% of fund assets in any single security - which
helps diversify the product.
is also a regulatory
classification, distinguishing ETFs from other exchange-
traded products such as
(Exchange Traded
Commodities) or ETNs (Exchange Traded Notes) which
are not UCITS compliant and are subject to additional
risks.
