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ETF Times: July 12 - 16

A range of new ETFs that track the Brazilian and Chinese stockmarkets, both of which suffered over the past week

Morningstar ETF Analysts 21 July, 2010 | 3:05PM
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New Listings
HSBC has launched a Brazil ETF on the London Stock Exchange. The new ETF will track the MSCI Brazil index which tracks the equities of the largest companies in the country. The ETF will use physical replication to track the index's returns. The total expense ratio (TER) for the ETF will be 0.60% annually. HSBC plans to list the ETF on additional exchanges, and also has plans to add other emerging market ETFs to its lineup in the coming months.

ComStage has launched two China ETFs on the Deutsche Borse's Xetra platform. The equity ETFs track the Hang Seng and the Hang Seng China Enterprises indices, which include companies listed on the Hong Kong Stock Exchange. Each ETF charges a TER of 0.55% annually.

db x-trackers has launched ten gold-backed ETCs on the London Stock Exchange. Each of the new ETCs hold physical gold as collateral. There are potential benefits to this approach, as historically gold prices tend to rise in times of uncertainty about the market, times when investors may be concerned about the swap counterparties' financial situation. The ETCs include the S&P GSCI, Commodity Booster, S&P GSCI Agriculture, Agriculture Booster, S&P GSCI Energy, Energy Booster, Natural Gas Booster, Industrial Metals, Industrial Metals Booster, and the WTI Crude Oil Booster. The Booster indices mimic the weighting of the corresponding S&P GSCI indices, but take a different approach to rolling futures contracts. Instead of just rolling into the next futures contract as the current one expires, the Booster can purchase any futures contract that expires within the next 13 months, in order to minimise the cost of rolling the contracts. This strategy can be advantageous given the current state of persistent contango that exists across many commodities futures markets. The ETCs each have TERs of 0.45% per annum. db x-trackers also launched physical gold and silver ETCs, each sporting a TER of 0.29% annually.

Standard Commodities has launched a gold ETC on Xetra. The ETC branch of Royal Bank of Scotland charges a 0.28% annual TER for the product, which tracks the performance of the London Gold Market AM fix price in US dollars.

Best and Worst Performers for the week of July 12 - 16
Greek equities, wheat prices and European auto companies were some of the top-performing categories for the week. The Greek market continued the up-and-down ride it has taken investors on all year. Poor weather for crops in the US and Europe helped boost the prices of agricultural commodity funds. European automotive shares got a lift from favourable results from both Daimler and BMW.

While the Chinese market itself was not among the worst-performers of the week, it had a large influence on the ETFs that were. For instance, Chinese cuts in payments for steel for August delivery had a large effect on industrial metals. Also, concerns over a potential reduction in growth in China hit the Brazilian equity market as China is one of the country's largest export markets.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Morningstar ETF Analysts  research hundreds of ETFs available to European investors. The Morningstar Rating for ETFs is based on a risk-adjusted performance measure.