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Synthetic Securities Are Not So Strange

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YOU PROBABLY OWN SOME YOURSELF
"Synthetic securities are not so strange. Many retail investors own them," the blog Interfluidity notes. "If you hold a commodity ETF or a equity ETF that tracks its benchmark via futures, you hold a synthetic security. Like a synthetic CDO, commodity and equity ETFs are investment vehicles that hold very vanilla “collateral securities” (like Treasury bills), but simulate exposure to some other thing by taking positions in derivative markets."
SOURCE:   FT Alphaville

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