Infrastructure and Sustainability ETFs On Offer

ETF TIMES: Unrest in the Arab world hit ETFs tracking the region last week, while cotton trackers topped the gainers

Morningstar ETF Analysts 8 March, 2011 | 6:20PM
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New Listings: February 28 - March 4
ETF Securities launched two infrastructure ETFs on the London Stock Exchange. The ETFX Dow Jones Brookfield Global Infrastructure ETF (BGIT) and the ETFX Dow Jones Brookfield Emerging Markets Infrastructure ETF (BIEM) both use synthetic replication to track the performance of their respective index. The Global ETF charges a total expense ratio (TER) of 0.60%, while the Emerging Markets ETF's TER is 0.65%. To qualify for inclusion in the Global index, a company must derive more than 70% of its cash flows from infrastructure-related activities, while the corresponding number for the Emerging Markets index is 50%. The Global index consists of more than 90 companies from 20 different countries, whilst the Emerging Markets index consists of 71 companies from 16 different countries. There is little overlap between the two indices, as they only have 9 constituents in common.

iShares launched two equity ETFs with a sustainability focus on the London Stock Exchange. The iShares Dow Jones Global Sustainability Screened ETF (IGSU) and the iShares Dow Jones Europe Sustainability Screened ETF (IESE) both use physical replication to track the performance of their respective index. The universe of companies eligible for inclusion in the Global index are the 2,500 largest (as measured by free-float market capitalisation) in the Dow Jones Global Total Stock Market Index, whilst the 600 largest European companies in the Dow Jones Global Total Stock Market Index are eligible for inclusion in the European Sustainability index. The top 20% of companies are selected for inclusion in each index based on criteria from the Sustainable Asset Management's (SAM) Corporate Sustainability Assessment. The Global ETF charges a TER of 0.60%, whilst the European ETF charges a TER of 0.45%.

Best and Worst Performers for the week of February 28 - March 4
Cotton prices continued to spiral higher leading the ETFS Cotton ETC to the top of the list of best performing ETPs for the week by a wide margin. The ongoing turmoil in Libya drove oil prices to their highest levels since 2008, which not only helped the oil-related ETCs but also the silver ETCs and ETFs, as investors turned to the precious metal as a 'safe haven' investment.

The Kuwaiti stock market hit a six-year low last week, so it was no coincidence that the Lyxor FTSE Coast Kuwait 40 ETF was the worst performing ETP of the week, as investors grow wary of the Arab states due to the potential for further unrest in the region. With natural gas spot prices falling slightly and a rare increase in the amount of working gas in storage during February, natural gas ETCs were among the week's worst-performing ETPs. ETFs tracking the performance of the European banking sector were also off this week as the new stress tests begin, and investors took profits in a sector which had increased 10% in the first two months of the year.

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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