Below are some of the snapshots from the semi-annual report taken from db x-trackers, which is a series of ETFs by the Deutsche Bank. The semi-annual report tells us about the composition of the stocks which are held by these ETFs.
The picture above shows the composition of the stocks held by the db x-trackers MSCI Japan TRN Index ETF. This appears quite alright to me since it is supposed to track a Japanese stock market index and all these stocks are Japanese companies although it may not be part of the index. How about the next one ?
The picture above shows the composition of the stocks held by the db x-trackers FTSE/Xinhua 25 China ETF. So it's supposed to track a stock market index that consists of China companies. Now take a closer look at the composition of the stocks. Do any of these names of these companies sound like China companies to you ? I'm not sure about you but these companies seem to be Japanese companies. This is what I'm talking about. Swap-based ETFs may be holding stocks that have nothing to do with the index which it is supposed to track.
In fact, the composition of stocks in the above list of ETFs issued under db x-trackers have their composition of stocks that sounds like the previous 2 pictures that I have discussed earlier. And these ETFs are tracking the stock indices of countries such as Russia, Vietnam, US, Europe and so on.
Why am I bringing this up ? That is because these ETFs, as discussed in my earlier post, lacks transparency and carries an additional counterparty risk.
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