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Lyxor UCITS compliant Exchange Traded Funds (Lyxor UCITS ETFs) referred to on this website are open ended mutual investment funds (i) established under the French law and approved by the Autorité des Marchés Financiers (the French Financial Markets Authority), or (ii) established under the Luxembourg law and approved by the Commission de Surveillance du Secteur Financier (the Luxembourg Financial Supervisory Committee). Most, , of the protections provided by the Danish regulatory system generally and for funds authorised in Denmark do not apply to these exchange traded funds (ETFs).


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Index Replication Process


Lyxor UCITS ETFs follow both physical and synthetic index replication process.


However, most Lyxor UCITS ETFs follow synthetic replication process. This consists of entering into a derivative transaction (a ‘Performance Swap’, as defined below) with a counterparty that provides complete and effective exposure to its benchmark index. Lyxor has adopted this methodology in order to minimise tracking error, optimise transaction costs and reduce operational risks.


A Performance Swap is a contractual agreement which is negotiated over-the-counter (OTC) between two parties: the Lyxor UCITS ETF and its counterparty. From a risk perspective, each Performance Swap ranks equally with other senior unsecured obligations of the counterparty, such as common bonds (i.e., same rights to payments). In the Performance Swap, the counterparty of the Lyxor UCITS ETF commits to pay the Lyxor UCITS ETF a variable return based on a pre-determined benchmark index, instead of a fixed stream of income (as in bonds). At the same time, the counterparty will receive from the Lyxor UCITS ETF the performance and any related revenues generated by the basket's assets (excluding the value of the Performance Swap) held by the Lyxor UCITS ETF. Information provided on individual ETFs includes data on the basket relating to the ETF and the percentage value of the basket represented by each asset. The information is relevant to the closing values on the date given. 


Investment Risks


The Lyxor UCITS ETFs described on this website are not suitable for everyone. Investors' capital is at risk. Investors should not deal in this product unless they understand, having obtained independent professional advice where necessary, its nature, terms and conditions, and the extent of their exposure to risk. The value of the product can go down as well as up and can be subject to volatility due to factors such as price changes in the underlying instrument and interest rates. If a fund is quoted in a different currency to the index, currency risks exist.


Prior to any investment in any Lyxor UCITS ETF, you should make your own appraisal of the risks from a financial, legal and tax perspective, without relying exclusively on the information provided by us. We recommend that you consult your own independent professional advisors (including legal, tax, financial or accounting advisors, as appropriate).


Specific Risks


·         Capital at Risk. ETFs are tracking instruments: Their risk profile is similar to a direct investment in the Benchmark Index. Investors’ capital is fully at risk and investors may not get back the amount originally invested. Investments are not covered by the provisions of the Financial Services Compensation Scheme (“FSCS”), or any similar scheme.

·         Counterparty Risk. Investors may be exposed to risks resulting from the use of an OTC Swap with Societe Generale. Physical ETFs may have Counterparty Risk resulting from the use of a Securities Lending Programme.

·         Currency Risk. ETFs may be exposed to currency risk if the ETF or Benchmark Index holdings are denominated in a currency different to that of the Benchmark Index they are tracking. This means that exchange rate fluctuations could have a negative or positive effect on returns.

·         Replication Risk. ETFs are designed to replicate the performance of the Benchmark Index. Unexpected events relating to the constituents of the Benchmark Index may impact the Index provider’s ability to calculate the Benchmark Index, which may affect the ETF’s ability to replicate the Benchmark Index efficiently. This may create Tracking Error in the ETF.

·         Underlying Risk. The Benchmark Index of a Lyxor ETF may be complex and volatile. When investing in commodities, the Benchmark Index is calculated with reference to commodity futures contracts which can expose investors to risks related to the cost of carry and transportation. ETFs exposed to Emerging Markets carry a greater risk of potential loss than investment in Developed Markets as they are exposed to a wide range of unpredictable Emerging Market risks.

·         Liquidity Risk. On-exchange liquidity may be limited as a result of a suspension in the underlying market represented by the Benchmark Index tracked by the ETF; a failure in the systems of one of the relevant stock exchanges, Societe Generale or other Market Maker systems; or an abnormal trading situation or event. 


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Further information on the risk factors are available in the [Risk Warning – link to risk page] section of the website.


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August, 2015





18 Jan 2019

How ETFs endure in challenging times

2018 was one of the worst years in living memory for the financial markets, but how exactly did investors react to the turbulence? Looking at how their preferences changed over such a period isn’t just interesting in itself – it might also help us figure out what may happen in 2019. Let’s take a look at some of the major trends from last year.

ETF flows slowed significantly across the globe in 2018 - but still enjoyed their second-best year for net new assets 

Last year proved challenging for investors, bookended as it was by an early market “melt-up” and an even more dramatic late meltdown. It began and ended in chaos amid mounting economic and political uncertainty on both sides of the Atlantic. Nearly all asset classes closed in negative territory.

Worldwide ETF market assets under management (AUM) reached $4.7trn, down a modest 0.3% on 2017. Flows were down 21%. However, this is still the second best year in terms of net new assets (NNA) right behind 2017. In the European market, the trend was even more apparent. NNA declined by 52%, while AUM dropped by 0.4% to reach €633bn. Even in Europe, yearly inflows still reached their third highest ever after 2017 and 2015.

2018’s ETF winners and losers

At the global level, fixed income and equity ETFs suffered equally, with NNA down 24%. European equities suffered the most in terms of outflows flows over the year, shedding $22bn – in stark contrast to the $41bn of inflows they received the previous year. Asia Pacific equities held up best, with up 7% on 2017 levels. In fixed income, the only category to gather significant assets was government bonds, where inflows of $76bn more than tripled those of 2017. Riskier parts of the market, like high yield, suffered outflows.

In the European ETF market, the trends were similar, if not exacerbated. US equity ETFs were the year’s big winners, gathering €20bn of inflows (a rise of 54% on 2017 levels). Developed-market global was the only other equity category not to experience lower inflows in Europe (they gathered €7.2bn over the year, essentially the same as in 2017). Emerging equity was the third-most successful category in Europe, gathering €6bn of assets, boosted by less tight financial conditions in the US and appealing valuations.

European equities also suffered the most among domestic investors, experiencing outflows of €3.4bn after receiving inflows of €22bn the previous year. This was primarily due to outflows of €4.9bn from eurozone equity ETFs, with the region falling out of favour due to a succession of issues including Germany’s struggles to form a government, the Italian budget crisis and the ECB’s confirmation it would start scaling back its bond-buying programme. The standout result for fixed income was again to be found in safe havens, and specifically developed market government bonds – where inflows of €12.1bn were an all-time high.

Factor investing on the rise

While sector ETFs gathered just €0.2bn over the year, European investors pumped €1bn of money into factor-based ETFs. Quality did best, with €0.9bn of inflows, followed by momentum (€0.7bn) and low volatility (€0.5bn). Defensive strategies did particularly well in the second half of the year, as investors looked to protect their equity gains in an increasingly uncertain environment. 

Increasing interest in ESG 

Responsible investment is a burgeoning market for the ETF industry, with €4bn of inflows into ESG ETFs in Europe in 2018. This equated to 9% of flows into all ETFs and was well ahead of 2017’s inflows of €2.2bn. Despite their strong growth this year, ESG ETFs still only account for a fraction of the assets in the global ETF market. The signs are encouraging though and more growth looks inevitable across the board. For now though, strategies taking a broad, best-in-class approach to ESG criteria are grabbing the lion’s share of the market.

Passive is winning the ongoing battle against active – even with all the market uncertainty

Overall fund flows in Europe fell significantly in 2018, down from €770bn in 2017 to €187bn. In fact, investor uncertainty was such that flows were less than half of their average of €424bn over the past seven years. However, how those flows break down could, in our view, be a sign of things to come:

  • The gap between inflows into active and passive funds is now lower than it’s been in Europe for a long time.
  • Active funds received just €27bn more than passive funds in 2018, much lower than the average annual gap of €250bn over the past seven years.
  • Despite falling by over a half from €115bn in 2017 to €52bn, flows into passive equity funds in Europe were again higher than those into active strategies.
  • Active equity funds collected just €30bn of inflows over the year.
  • And for the first time, passive also won in fixed income. Passive fixed income funds received inflows of €26bn in 2018, compared with outflows of €14bn from active funds – the first ever year there have been net outflows from active bond funds.

What to look out for in 2019

What can we expect this year? As we explained in our 2019 outlook blog, the upside potential for global equities looks limited but the possibility of more volatility looks elevated.

We’ll be tracking the evolution of economic survey results like PMIs closely over the year because developed market equity ETF flows have been correlated with activity for some years. Given developed economic growth could taper off slightly, flows into developed equity ETFs could do the same.  Risk reducers like minimum variance and quality smart beta ETFs are likely to benefit as investors adopt more defensive positioning.

Concerns about growth in the US are increasing and the Fed has become increasingly dovish in its tone. At most there’ll be one or two rate hikes this year, but there may not be any at all should data soften further. That’s great news for emerging markets assets, so the rotation from developed to emerging that got underway late last year should continue. Expect further inflows into emerging equity funds over the year.

Bond investors are likely to face plenty of challenges this year, with central banks withdrawing their quantitative easing programmes and interest rates rising. Short-duration ETFs should continue to attract interest. Meanwhile, we expect inflation to creep up gradually in both the US and Europe, so inflation-linked bond ETFs could prosper at some point later in the year.

Finally, ESG ETFs look set to grow further in popularity over the coming year. Flows should continue to receive support not just from investor demand but also through regulation. In May 2018, the EC announced an action plan to finance sustainable growth that will compel all investors to include ESG criteria in their investment decisions.

All data: Lyxor International Asset Management, Bloomberg & ETFGI. Data as of 31/12/2018. Data related to active vs passive funds performance is sourced by Morningstar as of 30/11/18.

Risk Warning​

This document is for the exclusive use of investors acting on their own account and categorised either as “Eligible Counterparties” or “Professional Clients” within the meaning of Markets in Financial Instruments Directive 2014/65/EU. These products comply with the UCITS Directive (2009/65/EC). Société Générale and Lyxor International Asset Management (LIAM) recommend that investors read carefully the “investment risks” section of the product’s documentation (prospectus and KIID). The prospectus and KIID are available free of charge on, and upon request to

The products mentioned are the object of market-making contracts, the purpose of which is to ensure the liquidity of the products on the London Stock Exchange, assuming normal market conditions and normally functioning computer systems. Units of a specific UCITS ETF managed by an asset manager and purchased on the secondary market cannot usually be sold directly back to the asset manager itself. Investors must buy and sell units on a secondary market with the assistance of an intermediary (e.g. a stockbroker) and may incur fees for doing so. In addition, investors may pay more than the current net asset value when buying units and may receive less than the current net asset value when selling them. Updated composition of the product’s investment portfolio is available on In addition, the indicative net asset value is published on the Reuters and Bloomberg pages of the product, and might also be mentioned on the websites of the stock exchanges where the product is listed.

Prior to investing in the product, investors should seek independent financial, tax, accounting and legal advice. It is each investor’s responsibility to ascertain that it is authorised to subscribe, or invest into this product. This document is of a commercial nature and not of a regulatory nature. This material is of a commercial nature and not a regulatory nature. This document does not constitute an offer, or an invitation to make an offer, from Société Générale, Lyxor Asset Management (together with its affiliates, Lyxor AM) or any of their respective subsidiaries to purchase or sell the product referred to herein.

Lyxor International Asset Management (LIAM), société par actions simplifiée having its registered office at Tours Société Générale, 17 cours Valmy, 92800 Puteaux (France), 418 862 215 RCS Nanterre, is authorized and regulated by the Autorité des Marchés Financiers (AMF) under the UCITS Directive (2009/65/EU) and the AIFM Directive (2011/31/EU). LIAM is represented in the UK by Lyxor Asset Management UK LLP, which is authorized and regulated by the Financial Conduct Authority in the UK under Registration Number 435658. Société Générale is a French credit institution (bank) authorised by the Autorité de contrôle prudentiel et de résolution (the French Prudential Control Authority).

Research disclaimer

Lyxor International Asset Management (“LIAM”) or its employees may have or maintain business relationships with companies covered in its research reports. As a result, investors should be aware that LIAM and its employees may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Please see appendix at the end of this report for the analyst(s) certification(s), important disclosures and disclaimers. Alternatively, visit our global research disclosure website

Conflicts of interest 

This research contains the views, opinions and recommendations of Lyxor International Asset Management (“LIAM”) Cross Asset and ETF research analysts and/or strategists. To the extent that this research contains trade ideas based on macro views of economic market conditions or relative value, it may differ from the fundamental Cross Asset and ETF Research opinions and recommendations contained in Cross Asset and ETF Research sector or company research reports and from the views and opinions of other departments of LIAM and its affiliates. Lyxor Cross Asset and ETF research analysts and/or strategists routinely consult with LIAM sales and portfolio management personnel regarding market information including, but not limited to, pricing, spread levels and trading activity of ETFs tracking equity, fixed income and commodity indices. Trading desks may trade, or have traded, as principal on the basis of the research analyst(s) views and reports. Lyxor has mandatory research policies and procedures that are reasonably designed to (i) ensure that purported facts in research reports are based on reliable information and (ii) to prevent improper selective or tiered dissemination of research reports. In addition, research analysts receive compensation based, in part, on the quality and accuracy of their analysis, client feedback, competitive factors and LIAM’s total revenues including revenues from management fees and investment advisory fees and distribution fees.

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