Return to Blog

What Happens to an ETF tracking a Lehman Brothers Index

As you may know an ETF (Exchange Traded Fund) must track a registered index (you can read my post on ETFs and ETNs for more information).  Many exchange traded funds follow a Lehman Brothers Index.  Barclays is buying many of Lehman Brothers' assets, including their name, New York Building, trading, risk management, and index departments; they will be giving all 10,000 Lehman employees a 90 day contract to choose the best fit employees, laying off the rest.  It is unclear what exactly Barclays will do but Barclays has been given special promission to provide an index to an ETF it issues.  Ussually an index provider must be a third party to an ETF provider.  Read more about this Here

Even if Barclays did not buy Lehman's index department the assets held in trust by the ETF are safe and there is no risk of default or loss.  Since the index an ETF tracks is just a set of rules and guidelines in which an ETF most follow for investment.  This is why ETFs are called passive investing.  Worse case the ETF would have to adjust to a similiar but different index.  This may cause some assets and allocations to change but it would not have any tax consequnces.

ETNs:

Barclays will not however being buying Lehman Brothers strutured debt including their ETNs  (again read my blog on ETNs to get up to date with their unique risks).  This promisory notes that Lehman has will most likely default.  These ETNs include EOH (Opta Lehman Commodity Pure Beta Agrowculture) and RAW (Opta Lehman Commodity Pure Beta).  Read more Here

Also, AIG acts as an insurance provider for some large european ETC issuers (ETCs are Exchange Traded Commodities pretty much just like an ETN).  This large issuers have credit agreements with AIG which insures their ETCs in case of default, these are a form of credit swaps.  Read More Here

Wiser Wealth Management, Inc. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

Happy Birthday to Kylie, our Marketing Assistant! Kylie works hard behind the scenes on our website, podcast, social media, and so much more.

Meet Daphne, our Financial Planning Intern. She is studying Finance at The University of Georgia. We are excited she's joined us for the summer!

https://conta.cc/3Ov1Fub

Your Medicare premium is affected based on which tax bracket you fall within after age 63. IRMAA is your income-related monthly adjustment amount. Watch today's video to learn more about how IRMAA works.

https://conta.cc/3zK9WGw #irmaa #medicare

The big question is, will we have a recession in 2022? Watch this video to find out!

https://conta.cc/3Mz2z7D #recession2022 #recession
https://youtu.be/45TvHaZf4z4#recession2022

Happy birthday to LJ our Video Production Manager! LJ works behind the scenes producing all of our podcasts and videos that we post every week. 🎉

Company

Services

Client Access

Firm Information

Schedule a Meeting
678-905-4450[email protected]
Google Rating
5.0
Based on 71 reviews
js_loader