FAQ

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Lyxor’s strategy is geared around three key values: innovation, transparency and flexibility.

Innovation:
Lyxor has been a pioneer of financial innovation since it was created in 1998, offering investors state-of-the-art diversification tools based on a wide selection of risk profiles and different underlying assets.
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Transparency:
For Lyxor, transparency is a top priority - and the vital corollary of innovation. Advanced monitoring tools give Lyxor a clear picture of the risks borne by investors. This, in turn, gives investors access to detailed reporting as well as complete transparency with regard to asset management processes and decisions.
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Flexibility:
Lyxor has preserved the start-up spirit it had when it began operations a decade ago, and offers its clients a dynamic, flexible approach combined with the guarantees afforded by the backing of a major bank. One of Lyxor's major assets as an asset manager is its high degree of flexibility. For clients, this "Lyxor added value" translates into tailor-made funds fine-tuned to their risk profile and return objectives, whatever their fiscal, accounting or regulatory constraints.
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• Attain or hedge exposure to an index in an efficient way regardless of the investment horizon (medium or long term)
• Cover portfolios
• Invest cash on a short-term basis while waiting for investment decisions
• Gain management efficiency by reducing the time and cost of maintaining core exposure

The convenience of a mutual fund combined with the transparency of a single security tradeable on exchanges.

Save time & money. ETFs are a very good solution in terms of both ease of use and costs. It is more advantageous to use ETFs than to invest directly in all the underlying securities of an index in order to implement asset management. Investors enjoy the convenience of delegated management, since the management company is in charge of index adjustments. With ETFs, investors can avoid re-weighting their portfolio over a limited period, and therefore can limit the potential problems linked to the liquidity of certain securities. Delegated management helps investors to devote their time and energy into other investments aiming to outperform the index: stocks over-weightings, options, etc. Tracking error close to zero. ETFs have specifically been designed to track market indices. With Lyxor ETFs, investors get the market performance. Lyxor ETFs closely replicate their benchmark index. The tracking error is close to zero and correlation is over 99.99%. Investors can receive annual dividends from ETFs based on the stock index.

Continuous trading. Each ETF closely tracks the index it refers to, enabling investors to benefit from the performance of the index as easily as if they had bought a single stock. It thus provides instant exposure to a basket of securities through a single investment tool, which is quoted continuously during local trading hours. Like market-listed securities, ETFs can be bought and sold at a quoted price at any time during the local trading day. No minimum volume is required. High liquidity. Liquidity is provided by designated market makers who are committed to offering real time prices (bid/offer), small spreads (0.06% on the Lyxor ETF DJ Euro Stoxx 50 on average over 2005 - source: Euronext) and neutrality towards the asset manager and the index provider. The market price is always a fair price because any imperfections would be immediately arbitraged (ETFs against futures for instance).

Transparency. For each ETF operated by Lyxor AM, the asset management company discloses the perfect basket of the fund and the net asset value (NAV) for one unit every day on Reuters, Bloomberg and the Internet. Furthermore, stock exchanges publish intra-day information on the indicative net asset value (indicative NAV), enabling investors to stay up to date with the progress of their investment and make comparisons with the bid/offer on the market.

Cost efficient. ETFs enable investors to gain broad exposure to the entire market on a real time basis and at a lower cost than any other investment tools. ETFs have an all-in fee and no other costs are deducted from the fund. Lyxor ETF management fees (from 0.165% to 0.65% p.a. including taxes) are calculated daily on a proportional basis and deducted from the fund’s assets. No other fees are charged. Unlike traditional mutual funds, there are no front-end and back-end loads for market trading. Your financial intermediary will charge the same intermediation fees as for any other market security.

Lyxor ETFs give you great flexibility in terms of trading. You can buy or sell Lyxor ETFs like any other share on the stock exchange or deal directly with the fund's partners if you are a professional investor.

Buying and selling on the stock exchange. Market makers are committed to quoting (bid/ask) each ETF unit during exchange opening hours with regard to volume and minimum spreads. Investors can thus invest core portfolio holdings in a flexible and efficient manner during local trading hours.


Creation and redemption of units through the asset management company. One of the main innovations of ETFs is that they afford investors two forms of liquidity: on top of the secondary market liquidity, ETFs allow the daily creation of new units (or redemption of existing units) in the primary market at the fund’s net asset value. This can be done either through delivery of a basket of securities or cash. Indeed, ETFs are invested in representative security baskets of the underlying indices. Creation/redemption is subject to volume conditions and fees charged by the asset management company and is thus more suitable for large investors. In practice, only authorised participants such as market makers operate on this primary market. On a daily basis, the asset manager publishes the net asset value for cash subscription, as well as the composition of the “perfect basket” and a cash adjustment (positive or negative amount) for new subscriptions (or redemptions) in kind. The combination of a liquid secondary market on the stock exchange and the possibility for investors to exchange a basket of securities, the “perfect basket”, against units in the fund helps to create, through arbitrage, a perfect correlation between ETF quotations and the relevant index. Thanks to the creation/redemption process, the liquidity of the ETF is driven by the liquidity of the benchmark index.