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UBS is the first ETF provider to introduce the drag level for synthetically replicated ETFs – a unique "all-in fee concept" for ETFs that enables investors to be informed in advance about any costs they can expect, thereby offering them full cost control.
What is drag level?
The drag level is the sum of all costs applied to the fund. It comprises the total expense ratio (TER) in addition to all costs charged to the fund (including swap costs). In other words, the drag level is the predefined future performance differential between the ETF and the index, offering investors full cost transparency.
Full cost transparency before investing
Retrospective concepts such as realized tracking error or total cost of ownership publish historical costs for the previous one-year period only. Owing to the dynamic nature of financial markets, past costs are not a reliable indicator of future costs.
Unique "all-in fee concept"
UBS is the only ETF provider to publish the drag level for synthetically replicated ETFs. The drag level is defined every year on July 31 and is applicable through to July 31 of the following year. In this way, investors are informed already before investing about any costs they can expect. UBS introduced this unique "all-in fee concept" in order to satisfy the highest transparency requirements.
Drag levels for synthetically replicated UBS ETFs are applicable as of August 1 of each year through to July 31 of the following year and are published on the UBS ETF Website, in the product overview, in the fact sheets and in other informational material of UBS ETFs.
How the drag level concept works
The drag level not only comprises all costs applied to the fund but also applies one year in advance.