Exchange Traded Fund Issuers
We conduct research on the large ETF issuers and once the ETF issuer is approved by us, the offerings of this provider are evaluated. Currently we use four of the largest ETF issuers, namely, Blackrock iShares, Vanguard, State Street SPDRs and Charles Schwab. These issuers provide the most liquidity at the lowest cost while providing the lowest tracking error to the relevant indices.
We are focused on risk and thus do not use any Exchange Traded Notes. An Exchange Traded Note (ETN) is a type of unsecured, unsubordinated debt security issued generally by banks based on the performance of a market index minus applicable fees, with no period coupon payments distributed and no principal protections. Since an ETN does not hold the underlying assets of the index it is tracking, the downside of an ETN is that if the underlying bank goes bankrupt, you lose your investments. This added risk is not rewarded with lower costs than an ETF or higher returns, and therefore Magwitch Securities does not invest in ETNs.