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CDS ETFs

ETF Database,  BI, Here Come Credit Default Swap ETFs, here. Interesting move that makes sense; wrap CDS indicies in ETF format.  The HG Indicies might be OK to be a market maker for, but it’s very asymmetric information in the CDS market. You can be trading against folks who can trigger the defaults in the loan market. Once you are no longer primarily trading credit spread  as opposed to default payout it is a problem.

ProShares is looking to grow its portfolio with new CDS ETFs focusing on both North American and European credit risk through investment grade and high yield issues. The specific differences between all eight funds are outlined in the SEC filing [also check out the Visual History Of The Dow Jones Industrial Average].

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