Neon - FuW Swiss 50 Index NTR

Neon added a new free trading product to their investing offer:
FuW Swiss 50 Index NTR

The product is really pricey: 0.72% and is a structured product

I understand the point to use a more diversify index than the SMI.
But the SLI index already exists.

Neon is clearly offering a product which is not in the interest of their clients…

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Most likely this is sponsored/subsidized by the fund provider and Neon is just advertising it.

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Fees, fees, fees, yeah!

In addition, the «FuW Swiss 50 ETP» is secured by a deposit, which offers additional safety compared to ETFs. How? The answer is (relatively) simple: By Leonteq providing a collateral, which is basically a deposit in the form of securities that matches the value of the ETP. The collateral is deposited and held in safekeeping by SIX Group, a Swiss services provider in the fields of securities, financial information, as well as payments. If Leonteq were to default on payments (i.e. go bankrupt), SIX would sell the collateral and pay out the equivalent value of the investment product to you, the investor. Such a liquidation would be carried out quickly, especially in comparison with bankruptcy proceedings, but also in comparison with the liquidation of an investment fund with a foreign domicile.

Never heard about such a structure. Surely an ETF is too simple to ask for a 0.72% management fee.

P.S. The idea of the index is not bad by itself, but I wouldn’t implement it as an investment strategy.

Well, yes, if you don’t pay for the product, you are the product. While Neon is a great offer for payments, don’t trust them blindly for other things.


The structure is probably chosen because of the main risk of structured products: issuer risk. But I’m not sure why they say it offers additional safety compared to ETFs, the issuer risk only applies to structured products. An ETP can be launched with much less capital (ca. 500k), but the fees (0.72%) are just not competitive in this case

They also added two ETFs from Xtrackers to their free investing offer:

  • Nasdaq 100 (IE00BMFKG444)
  • S&P 500 (IE00Z9SJA06)

Yes, at least these two ETFs are not too bad in term of TER. Even if I would advise to use synthetic ETF to avoid US wittholding tax.

plus the ETP was terrible from a tax point of view as you would lose WHT I understand.

The idea behind the index is actually not bad, it is relatively close to equal weighting. If there was an ETF investing in this index, I would probably give it a try.

Aren’t they merely describing a synthetically replicating ETF in layman’s terms?