I recently came across this new ishare’s ETF (I500 / IE00BMTX1Y45 / iShares S&P 500 Swap UCITS ETF) and got intrigued.
It’s synthetic ETF (and apparently the first such one for ishares) with fairly low TER (0.07%), negative tracking error (vs. net index, as is typical for synthetics using swaps to avoid dividend taxes), and among key selling points some publications note that it will hold a “substitute basket restricted to non-dividend paying stocks” thus avoiding associated taxes.
Most synthetic ETFs in CH are penalized with fictional income taxes - I presume due to such swap basket typically containing divs or something, these taxes make them comparable to conventional wisdom approach of going with US-domiciled physical ETFs, but with extra risks of synthetic constructions. And so if this new ETF promises tax-free divs, is this the holy grail of tax-efficient investing into US market or what? Am I missing anything? In ICTAX for last year it’s already listed with the income of $0 FWIW.
Anyone ventured into the area of synthetic etfs and has any insights about it?