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I am looking into some ETF's and i came across something which I didn't understand.

Some of the information that I am looking into are Total Holdings, Top 10 holdings and percent assets in Top 10.

This particular ETF has about 10 holdings and the percent assets in Top 10 is listed as 371.58%. How can an ETF have more than 100% for %asset in top 10?

  • Can you give an example of an ETF with this characteristic? – jmg229 Feb 18 '15 at 18:14
  • @jmg229 I am looking at RINF – user793468 Feb 18 '15 at 18:16
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    ETFs that are doing things like tracking the opposite of something will sometimes hold short positions or other kinds of positions that cause them to be able to have more than 100% of holding (by leveraging). RINF doesn't exactly do that, and I don't see where you get that percentage from; you may want to link that in your question for an answer specific to your question. – Joe Feb 18 '15 at 18:25
  • @Joe I am looking it here: etfdb.com/etf/RINF/#holdings – user793468 Feb 18 '15 at 19:51
  • Whoever down voted my question, care to explain? – user793468 Feb 18 '15 at 20:32
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RINF is a long/short spread ETF. This means it give you positive exposure to one asset and negative exposure to another. Because the assets are similar to each other, the overall risk of the total exposure is relatively low. Therefore it makes sense to lever up, which is what they have done. For every dollar you put in, the ETF takes a long position of multiple dollars and a short position of around the same amount. You have no overall exposure to interest rates if they do it right, but you have a magnified exposure to the difference between real and nominal interest rates (i.e., changes in expected inflation).

The actual assets are TIPS and swaps, but you can imagine doing something similar. Say you want to create a Visa/Mastercard long/short ETF. For every dollar people give you, you buy 10 dollars of Visa and short 10 dollars worth of Mastercard. It's a highly levered but nevertheless reasonable portfolio with only moderate risk because the two tend to move together.

In general, it's not unusual for a portfolio to have greater than 100% total weight. That's just another way of saying the portfolio is levered.

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RINF is shown with different, but logical, holdings here: http://www.xtf.com/ETF-Ratings/RINF on the Holdings tab. Of note is the fact that the other holdings on your link are in pairs, with one ending in a (-) sign. I'm not totally sure what that means, but I imagine it is related to the fact that it is ignored on the other source.

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