How the funds create their exposure

An ETF can create it's exposure in different ways. One way is to own all securities in the index that the ETF is replicating. This is called "full replication". XACT OMXS30™, XACT OMXSB™, Nordic30 and XACT OBX® create their exposure in this way.

In order to make fund management more efficient, a fund can, wholly or in part, create its exposure synthetically through derivative instruments. Derivative-based index funds can either invest in exchange-traded derivatives, usually index futures, or OTC-derivatives. XACT´s leveraged ETFs generate the exposure by using exchange-traded index futures. 

If the fund holds OTC-derivatives, these instruments are usually swaps. An ETF holding this type of instrument is often referred to as applying swap-based replication. For a fund tracking a commodity index where, for example, crude oil, grain and electricity are included, it would in principle be impossible to apply a full replication method. In this case derivative based replication is the only way it is practically possible to create the fund´s exposure.  XACT's sector ETFs, fixed income ETFs, XACT Nordic 120, XACT China and XACT Commodity create their exposure using OTC-derivatives, provided by Handelsbanken. For the counterparty risk that arises, Handelsbanken pledges collateral.