European ETFs Based on Credit Derivatives in the Works

It was just a matter of time, I suppose.  I'm having trouble understanding the difference between these iTraxx ETF's issued by DeutscheBank and a portfolio of bonds. 

Holding ETFs that own a portfolio of bonds, like the Corporate Bond Index based iShares (LQD – $106.61), just seems more direct and simple.  An ETF that uses credit derivatives just seems like a way to make the whole process more complicated for the investor and a way to insert more fees for the bankers/brokers/managers.

Here's a description of the Credit Derivative Based ETFs from IndexUniverse.com.

Disclosure:  I own a tiny amount of LQD in my IRA.  I've traded or used most kinds of derivatives at some point in my life but I never used a credit derivative.  This is sort of embarrassing given what a huge product they've become.  Guess I'll have to stick to boring old bonds for my retirement savings.

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