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2 years, 9 months ago
Educational program about ETF: how to purchase for 50k rubles a piece of a cluster of events and how to compare profitability on it to the bank deposit

ETF is, very roughly simplifying, cloudy consumption of events.

Each ETF paper represents an event of fund, and the fund actually is "storage" with events of strictly certain list. For example, at once events of Apple, MS, Google, IBM, Intel, AMD, HP, Symantec, EMC, SAP and other companies integrated by some general sign can enter there. If the companies with this sign are in total stable and grow, then "cluster" wins.

For example, in principle it is clear that the IT sphere will grow the next years (and can prevent unless a global catastrophe). It would be logical to take on a small set of events of each company and to sit to wait for profit. Everyone — because it is unclear which of these companions will survive and as will feel. However in the classical market for this purpose you would need several million dollars.

Naturally, sooner or later there had to be a simple and "humanitarian" tool for those who not the broker also does not want to understand investment subtleties. General automation allowed to collect such infrastructure and to create the tool.

So, one ETF paper represents something "an average on hospital" among events of the fixed list of the companies. If Apple wins against Google in the market of smartphones or on the contrary — to you all the same because you are interested only in that fact that in a year 20% more devices were sold.

If the market in general grows — ETF grows quicker than normal bank deposits if the market falls in general — ETF falls too.

Naturally, profitability can be lower or higher, than at single equity stakes (even if you "precisely" know who needs to be taken urgently), but at the same time risks of ETF are always lower due to diversification.

It is possible to carry out the following comparisons:
  • The bank deposit of the natural person amount to the insured sum provided with the state — the safest, but also the most low-profit option. Roughly speaking, the rate of ruble deposits exceeded the actual inflation unless in 2009 is the only known case when it was possible to increase money in bank.
  • Purchase of shares of the company selected by you (or groups) — option most profitable in the long term if you know that you do and to you will carry. Plus is necessary to you tools of the investor or own broker that, you see, not the best option if you do not play in this market professionally. What happens to ordinary people in the exchange market, perfectly shows the feature film "Wolf with the Wall Street".
  • The state perfectly understood these two features of the market and therefore already for a long time worked a possibility of "clustering" of events in mutual investment funds — mutual funds. They are most similar to the described "cloudy" structure, but at the same time, roughly speaking, are controlled manually from the console the administrator and very much depend on him. About what it is bad and what risks creates — below. Roughly speaking, you staked on the managing director here that not always came to an end positively.


The tool for very simple and transparent management of such "clusters" of events was necessary. First of all — protected and reliable that risks remained only from the markets, but not from intermediate processes. In the second — clear to ordinary people and not demanding special knowledge for investments. ETF turned out.

Physically ETF represents storage of securities where events listed in the fixed list join (it is called "index") the companies. You invested 1000 rubles — in a year the market grew by 21%, ETF grew by 21% (adjusted for the commission) — you have a share in approximately in 1210 rubles.

The solution was required by the following problems:

How to be protected from inclusion in fund of "bad" events?
  • The normal scenario of mutual fund looked so: at an urgent need (we will tell, for the benefit of related banking group) the management company just took and swindled with events a little. Absolutely slightly. For example, bought in mutual fund of an event of the friendly company or, on the contrary, too quickly sold the necessary events. Descriptions of such swindles a set, but the general essence in what the mechanism of mutual fund means that if you need to enter something into structure of fund, the managing director at first takes these shares, and then upon reports. Large mutual funds had cases when upon such report shares were sold back with entering of warning in a thorax to the managing director — but even in that case the fund in general incurs losses. Respectively, to be protected from such situations, it is authorized to ETF issuers to buy only events of the companies according to the list and only within the balanced strategy (that is it is impossible to perezakupit any specific). Each request is signed at least by additional supervisory authority (where the robot checking existence of new events in the list sits) therefore everything occurs quickly and iron. That is if suddenly the managing director some of distributors of ETF (like us) decides to purchase something not that is anyway in the depositary providing ETF, these events will not even get.
  • Protection against leaving from the market of "the last link" and all previous is necessary too. About MMM and other remarkable companies in Russia know firsthand therefore the most frequent question upon purchase of ETF to us — that will be if tomorrow you are closed. It will be sad, but all assets still safely will be stored in BoNY Mellon. That is it is absolutely unimportant who and as sold you ETF — these papers are provided directly. Here if at the same time to destroy Ireland and London, here then — yes, probably, restoring access to ETF will take few weeks. However, at such scenario, probably, will already be all the same.


In general from beginning to end and we built all service, and in world practice so — people are not necessary. They like janitors, service personnel. All the rest becomes only by rules and is controlled automatically.

So, that turned out in this "patch" of investment tools:
  • Forms as mutual index fund (unlimited a circle of participants and validity period).
  • Instead of management company — provider, that is the company which provides, upon technical service, but does not manage attachments. Where there are attachments, is defined by an index of fund.
  • Bargains as an event — for example, it is possible to purchase different ETF directly at the Moscow exchange through one of programs (QUIK, Transaq, Alpha direkt etc.) or having just called the broker. In the off-exchange market ETF it is possible to purchase at authorized officers (the authorized participants). Directly the ETF provider (FinEx) does not sell and does not take the share ETF in the secondary market.
  • Respectively, to each transaction on purchase of ETF from provider there corresponds the transaction on adding of events in fund for an index.
  • To each transaction in the secondary market directly there corresponds purchase and sale of basic assets.


In the USA and Europe the tool is used rather successfully, and, of course, it is far more popular, than in Russia. The main problem is that fact that for the organization of trade of ETF in the Russian Federation it is required to organize rather difficult infrastructure on a sheaf between IT and the legal sphere. We made it.

Bidding procedure in the Russian Federation

Educational program about ETF: how to purchase for 50k rubles a piece of a cluster of events and how to compare profitability on it to the bank deposit

Educational program about ETF: how to purchase for 50k rubles a piece of a cluster of events and how to compare profitability on it to the bank deposit

In more detail about the IT party of a question it is possible to read here on Habré — if it is short, then we for 4 years built huge infrastructure that it in general became possible that it worked without people where it is possible.

Result


As a result the normal way of purchase of ETF in Russia is rather simple. At first the person in 10 years of experience with sincere surprise learns that to keep money in bank is an idea not the most sensible as there is an inflation. Then reads how it is easy "to be pinned" at the exchange because of operational features, and then or loses interest in a question with the words "it is necessary to understand", or selects one of ready tools with reduced operational risks. There are no options, actually, - it is either ETF, or its analogs (actually ETF wrapped in a cover mutual fund from two green banks).

Physically it is necessary to contact the broker further and to open the account. It was necessary to go earlier, now it is enough to address to any company like Finam — open on a credit card. At some brokers it is necessary to receive physically the EDS, it is the most difficult question (some do not bother on physical delivery, and give the file). Decides usually in 3–4 days.

Then you or put the broker client QUIK or TRANSAQ for work with securities, or work in the web interface, or just trade in "voice" by phone. You can buy only what is provided at the Moscow exchange or on SPBEX. For example, with the IT companies focus will not take place — to collect an own portfolio will not come out a lot of different stocks. To Apple it is provided (on SPBEX about 50 more names without the issuer's consent listingovano), but here others — are not present.

One more problem of work not with ETF, and with events directly — risk from the broker and fund (they put events in depositary or not), a question with taxes (it is necessary to declare most), a question with risks — who worked with Cyprus, perfectly remembers that many securities did not reach to depositaries, and hung up on accounts of management companies and as a result did not get to investors. One more complexity is that the western brokers very often refuse to work with Russia. Plus, besides, taxes — at the Russian broker at you for 9 million rubles a privilege for the Russian income (it is important at rate fluctuations).

As a result we could inform of sale of ETF Russia — actually localized from scratch very necessary world tool for work with finance in long-term perspective.

Uf … If there are questions in general — set, I will tell in more detail. Once again I remind: a technical post about infrastructure and the organization here on Habré.

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