ETF Investors Face a Rush of New Listings

ETF TIMES: Several new ETF listings this week including fixed income offerings, while commodities were hit by China fears

Morningstar ETF Analysts 25 January, 2011 | 4:57PM
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ETF Times: January 17-21
ETF Securities has received approval to sell about 200 of its existing exchange-traded commodities (ETCs) in Spain, but it will not list the ETCs on the Bolsa de Madrid. ETF Securities is the leading provider of exchange-traded commodities and currencies in Europe.

New Listings
UBS launched three new hedge fund ETPs on the Deutsche Börse. The funds track the performance of the HFRX Global Hedge Fund index, which attempts to cover the entire universe of hedge fund strategies including distressed securities, event-driven, equity hedge, merger arbitrage and convertible arbitrage. Two of the ETPs target retail investors, with one denominated in euros and the other in U.S. dollars and both charging a 2.00% total expense ratio (TER), while the third fund is also denominated in U.S. dollars and targets institutional investors with a 1.50% TER.

iShares launched three currency-hedged equity ETPs on Euronext Amsterdam. They are also available on the London Stock Exchange. The products track the performance of the MSCI Japan index, the MSCI World index, and the S&P 500. The iShares MSCI Japan ETF (IJPE) has a TER of 0.64%, the MSCI World ETF's (IWDE) TER is 0.55%, while the S&P 500 ETF (IUSE) charges a TER of 0.45%. The currency exposure is hedged to the euro monthly using one-month forward FX contracts, and is not intended to completely eliminate the foreign exchange risk but to reduce it. For many investors, it's simpler to hedge currency exposure using a currency-hedged ETP than it is to maintain a separate currency hedge using derivatives. iShares also launched an ETP tracking the performance of the MSCI USA index on Euronext Amsterdam.

Lyxor launched two fixed income ETFs on the London Stock Exchange and Euronext Paris. One fund tracks the performance of the Markit iBoxx EUR Liquid High Yield 30 index (YIEL) and the other the Markit iBoxx USD Liquid Emerging Markets Sovereigns index (LEMB). The former has a TER of 0.45%, while the latter charges a TER of 0.30%. The corporate bond ETF caps the exposure to any individual issuer at a maximum of 5% of the index's value, and each bond included must be rated above CC.

Credit Suisse launched a range of 45 ETPs on Euronext Paris. The products were previously available on the London Stock Exchange, Deutsche Börse, Borsa Italiana, and of course the SIX Swiss Exchange. 13 of the products are focussed on emerging markets, while eight are fixed income funds.

BBVA launched two new ETFs on the Bolsa de Madrid. Both funds track the performance of inverse indices, one being the Spanish IBEX 35 equity index and the other the iBoxx Euro Sovereigns 3-5 year fixed income index.

Best and Worst Performers of the Week
For the second week in a row, ETPs tracking the performance of the Spanish equity market as well as those tracking the performance of the European banking sector were among the top performers as the Spanish government announced a bailout programme for its banks. Reports that German officials were discussing plans for a restructuring of Greece's debt also helped that country's equity markets. Also, cold weather in the U.S. boosted the natural gas futures market as inventories were drawn down amid increased demand.

Commodities including silver, lead and zinc hit a roadblock this week in the form of reports that China will raise rates in an effort to stem inflation as the country's GDP continues its strong growth trend. A declining lira and the Turkish central bank were behind the slide in ETFs tracking the Turkish equity market. A weaker lira has put pressure on Turkish banks’ fixed income portfolios, while increased reserve requirements being handed down by the central bank could stem credit growth.

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.

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