FAQ

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BUYING AND SELLING ETFs

What are the differences between the management fees, TER and ongoing charges ?

Ongoing charges: This is the only notion relating to fees that is harmonised at the European level. It appears in the KIID of each UCITS.
Ongoing fees correspond to the operating and management costs actually borne by the fund. Ongoing fees are calculated on the figures of the previous financial year (“ex-post” data).
When these figures are not yet available or are no longer relevant, an estimate of these fees is made for the current year.
Ongoing fees mentioned in the KIID as a percentage may vary from one year to another.
Management fees, which appear in the French regulatory documentation of a UCITS under the heading “Operating and management fees”, are the costs directly charged to the fund. They correspond to all expenses incurred for the operation of a UCI such as:
- management fees collected by the management company
- fees related to the depositary, statutory auditor, etc. (for Luxembourg funds, these fees would fall within the category of administrative fees, for example)
- regulatory fees (registration of the fund in other member states) (for Luxembourg funds, these fees would fall within the category of administrative fees, for example)
- index licencing fees, etc.
Certain European UCIs distinguish management fees (collected by the management company) from administrative fees (paid to the depositary, statutory auditor, legal advisers, regulators).  
This notion of management fees varies from one country to another or even from one fund to another. The prospectus of each UCI clearly defines it.
The following may be added to the operating and management fees:
- performance fees (remunerating the Management Company when the Fund has exceeded its objectives. They are therefore charged to the Fund): not applicable in the case of Amundi ETF funds
- transaction fees charged to the Fund
The TER (Total Expense Ratio) represents the operational fees/costs generated in managing the fund. TER is not a harmonised notion at the European level. Its calculation methodology may be defined by local regulations. When this is not the case, it is defined by the supplier of the data (management company, distributor, etc.).

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BUYING AND SELLING ETFs

What are the differences between the management fees, TER and ongoing charges ?

Ongoing charges: This is the only notion relating to fees that is harmonised at the European level. It appears in the KIID of each UCITS.
Ongoing fees correspond to the operating and management costs actually borne by the fund. Ongoing fees are calculated on the figures of the previous financial year (“ex-post” data).
When these figures are not yet available or are no longer relevant, an estimate of these fees is made for the current year.
Ongoing fees mentioned in the KIID as a percentage may vary from one year to another.
Management fees, which appear in the French regulatory documentation of a UCITS under the heading “Operating and management fees”, are the costs directly charged to the fund. They correspond to all expenses incurred for the operation of a UCI such as:
- management fees collected by the management company
- fees related to the depositary, statutory auditor, etc. (for Luxembourg funds, these fees would fall within the category of administrative fees, for example)
- regulatory fees (registration of the fund in other member states) (for Luxembourg funds, these fees would fall within the category of administrative fees, for example)
- index licencing fees, etc.
Certain European UCIs distinguish management fees (collected by the management company) from administrative fees (paid to the depositary, statutory auditor, legal advisers, regulators).  
This notion of management fees varies from one country to another or even from one fund to another. The prospectus of each UCI clearly defines it.
The following may be added to the operating and management fees:
- performance fees (remunerating the Management Company when the Fund has exceeded its objectives. They are therefore charged to the Fund): not applicable in the case of Amundi ETF funds
- transaction fees charged to the Fund
The TER (Total Expense Ratio) represents the operational fees/costs generated in managing the fund. TER is not a harmonised notion at the European level. Its calculation methodology may be defined by local regulations. When this is not the case, it is defined by the supplier of the data (management company, distributor, etc.).

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What is a short ETF? What is a leveraged ETF?

Also called Inverse ETFs, short ETFs implement a strategy offering an inverse exposure – upwards or downwards – to the daily performance of an index. Thus, in case of a decrease in this market, the net asset value of the ETF will increase and vice-versa. The costs related to the inverse performance strategy (short sale costs) are deducted from the fund’s performance.

The effect of the inverse performance is daily. The performance of the short index over a period of more than one day may therefore differ by -1 times the performance of the index over the same period (see example below).

Leveraged ETFs replicate the performance of a strategy that consists in doubling – upwards or downwards – the daily variation of an index thanks to leverage. Take the example of a CAC 40 leveraged ETF. If the CAC 40 index gains 2% over a day, an investment vehicle like a CAC 40 leverage ETF will gain 4%.

For ETFs, the leverage is daily. The performance of the index with leverage over a period of more than one day may therefore differ by 2 times the performance of the index without leverage over the same period (see example below).

These examples are deliberately simplified and do not take account of the cost of the short sale scaled to one day on the benchmark’s basket (costs measured by the repo variable) in the case of a Short ETF or financing costs for the doubling of the exposure (leverage costs) in the case of a leveraged ETF. These illustrative and theoretical examples do not in any way predict future scenarios and do not guarantee future return

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What is a short ETF? What is a leveraged ETF?

Also called Inverse ETFs, short ETFs implement a strategy offering an inverse exposure – upwards or downwards – to the daily performance of an index. Thus, in case of a decrease in this market, the net asset value of the ETF will increase and vice-versa. The costs related to the inverse performance strategy (short sale costs) are deducted from the fund’s performance.

The effect of the inverse performance is daily. The performance of the short index over a period of more than one day may therefore differ by -1 times the performance of the index over the same period (see example below).

Leveraged ETFs replicate the performance of a strategy that consists in doubling – upwards or downwards – the daily variation of an index thanks to leverage. Take the example of a CAC 40 leveraged ETF. If the CAC 40 index gains 2% over a day, an investment vehicle like a CAC 40 leverage ETF will gain 4%.

For ETFs, the leverage is daily. The performance of the index with leverage over a period of more than one day may therefore differ by 2 times the performance of the index without leverage over the same period (see example below).

These examples are deliberately simplified and do not take account of the cost of the short sale scaled to one day on the benchmark’s basket (costs measured by the repo variable) in the case of a Short ETF or financing costs for the doubling of the exposure (leverage costs) in the case of a leveraged ETF. These illustrative and theoretical examples do not in any way predict future scenarios and do not guarantee future return

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ETFs - THE BASICS

What are the main risks associated with an investment in an ETF?

Like any financial investment, ETFs present risks, especially but not limited to:
- the risk that the fund’s management objective will only be partially achieved;
- the risk linked to the volatility of the securities and/or currencies comprising the Fund’s benchmark;
- The values of ETF units are subject to market fluctuations. Therefore, investments may vary both downwards and upwards. The capital initially invested is not guaranteed.
- The capital initially invested is not guaranteed. Consequently, unitholders may lose all or part of their initially invested capital.
- The counterparty risk related to the chosen replication method: synthetic replication funds are exposed to the counterparty risk resulting from the use of financial futures traded over the counter with a credit institution as part of a “Total Return Swap”. The funds are therefore exposed to the risk that this credit institution will not be able to honour its commitments. The failure of the counterparty (or any other issuer) may reduce the net asset value of the fund;
- the counterparty risk related to the chosen synthetic replication method
The Fund’s market price is likely to deviate from its indicative net asset value. The liquidity of the Fund’s units on a listing market may be affected by any suspension that could be due to, particularly but not only:
i) a suspension or termination of the calculation of the benchmark by the supplier of the index,
ii) a suspension of the market(s) of the underlyings of the benchmark,
iii) the impossibility for a considered listing market to obtain or calculate the indicative net asset value of the Fund,
iv) an infraction by a market maker of the rules applicable on a considered listing market,
v) a failure in the systems, particularly IT or electronic systems, of a considered listing market,
vi) any other event that prevents the calculation of the indicative net asset value of the Fund or the trading of units of the Fund.
For equity ETFs
- volatility risk: this is the risk that the fund’s Net Asset Value will be volatile because of the volatility of the securities comprising the Fund’s benchmark;
For bond ETFs
- interest rate risk: the fund may be 100% exposed to interest rate risk, i.e., the risk of a change in the prices of fixed-income instruments arising from changes in interest rates;
- credit risk: this is the risk of a decrease in the credit quality or a default of a private issuer;

These risks, detailed in the legal documents of each Amundi ETF fund, are to be taken into account before any investment decision.

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ETFs - THE BASICS

What are the main risks associated with an investment in an ETF?

Like any financial investment, ETFs present risks, especially but not limited to:
- the risk that the fund’s management objective will only be partially achieved;
- the risk linked to the volatility of the securities and/or currencies comprising the Fund’s benchmark;
- The values of ETF units are subject to market fluctuations. Therefore, investments may vary both downwards and upwards. The capital initially invested is not guaranteed.
- The capital initially invested is not guaranteed. Consequently, unitholders may lose all or part of their initially invested capital.
- The counterparty risk related to the chosen replication method: synthetic replication funds are exposed to the counterparty risk resulting from the use of financial futures traded over the counter with a credit institution as part of a “Total Return Swap”. The funds are therefore exposed to the risk that this credit institution will not be able to honour its commitments. The failure of the counterparty (or any other issuer) may reduce the net asset value of the fund;
- the counterparty risk related to the chosen synthetic replication method
The Fund’s market price is likely to deviate from its indicative net asset value. The liquidity of the Fund’s units on a listing market may be affected by any suspension that could be due to, particularly but not only:
i) a suspension or termination of the calculation of the benchmark by the supplier of the index,
ii) a suspension of the market(s) of the underlyings of the benchmark,
iii) the impossibility for a considered listing market to obtain or calculate the indicative net asset value of the Fund,
iv) an infraction by a market maker of the rules applicable on a considered listing market,
v) a failure in the systems, particularly IT or electronic systems, of a considered listing market,
vi) any other event that prevents the calculation of the indicative net asset value of the Fund or the trading of units of the Fund.
For equity ETFs
- volatility risk: this is the risk that the fund’s Net Asset Value will be volatile because of the volatility of the securities comprising the Fund’s benchmark;
For bond ETFs
- interest rate risk: the fund may be 100% exposed to interest rate risk, i.e., the risk of a change in the prices of fixed-income instruments arising from changes in interest rates;
- credit risk: this is the risk of a decrease in the credit quality or a default of a private issuer;

These risks, detailed in the legal documents of each Amundi ETF fund, are to be taken into account before any investment decision.

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