Thoughts on ishares's new I500 ETF?

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?


S&P500 as underlying index.
Is going to be taxed as income - just as any other Swapper.

I don’t know which if any third-party publications make this claim. Going straight to the horse’s mouth though, iShares themselves lists a ton of dividend payers among their physical holdings.


For example

Yes, but they change often enough if you check holdings as of a few different dates. A few names are dividend paying, yes, e.g. PEP in current top 10 - but they didn’t hold at its previous ex dividend date, Dec 3, and I suppose they’ll get rid of it before next ex/d/d

It has no taxable income in ICTax because the fund was launched on the 24th september 2020. There WILL be a taxable income in 2021.


Have a look at this post regarding taxation of swap etfs

I think there used to be times when this was possible: Receiving no actual dividends but tracking an index synthetically. But tax authorities in many countries caught up to this (also swap income could potentially be taxed).

What about that post? Nothing relevant to me as far as i can see

It has existed for more than a whole quarter in 2020, accumulating some of the dividends from that quarter

Yes but those tend to have only a single date in ictax. Also sometimes it takes time for them to compute it, so would appear later.

„Bei kollektiven Kapitalanlagen, welche ihr Exposure synthetisch replizieren, ist zwingend ein gesondertes Steuerreporting für Schweizer Einkommenssteuerzwecke zu erstellen, aus welchem die Rendite des® Basiswerte(s) hervorgeht. Massgebend für die Ermittlung des steuerbaren Ertrages von Swap-based ETFs, welchen Aktienindizes zugrunde liegen, ist die Nettodividenden-Rendite (net dividend yield). Darunter ist die Bruttodividenden-Rendite der entsprechenden Indizes, abzüglich der anwendbaren Quellensteuern zu verstehen. Die Nettodividenden-Rendite für alle wichtigen Aktienindizes wird von den anerkannten Providern publiziert und kann für das Steuerreporting verwendet werden.“

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