ETF Times: 1 - 5 March
ETF industry news, new launches, and the best--and worst--performing ETFs of the week
Vanguard Plans to Launch ETFs in the UK
American asset management giant Vanguard recently announced plans to enter the UK ETF market later this year. The mutually-owned company is known as a low-cost leader, and its US ETFs generally have some of the lowest management fees in their respective categories and minimal tracking error. Vanguard is able to reduce the tracking error of its ETFs by operating them as a distinct share class of its large open-end funds. The firm is likely to replicate this strategy in the UK. According to Tom Rampulla, managing director at Vanguard UK, the firm will introduce a handful of ETFs at launch and continue to add to its offerings over time.
HSBC Unveils Plans for two new Emerging Markets ETFs
On February 23, HSBC announced plans for a pair of new emerging markets ETFs. The firm hopes to launch an ETF tracking China and one following the BRIC economies (likely mimicking the S&P BRIC 40 Index) before the end of April.
ETF Securities to Launch New Euro-Based Currency ETCs on Xetra
The Deutsche Boerse will be listing ten new currency ETCs in the coming weeks. The Euro-based products will complement its existing offerings on the London Stock Exchange.
New Listings
Amundi recently made a big splash on the Deutsche Borse, listing 17 ETFs. Most of them are equity funds, following country and regional indices from MSCI. There are also short and leveraged products following the DAX 30 and the STOXX Euro 50 indices. The firm also began offering a money market ETF tracking the EuroMTS Eonia Index.
On March 1, db x-trackers rolled out a new bond ETF on Xetra. The fund tracks the performance of an iBoxx index comprised of 100 Euro-denominated corporate bonds and sports a total expense ratio of 0.20%.
The Xetra exchange now has nine new exchange traded commodities (ETCs) available for investors. The funds, issued by Barclays Bank, will track the performance of indices covering agricultural products, industrial and precious metals as well as energy. Each charges a total expense ratio of 0.75%.
Best and Worst Performers for the week of March 1 - 5
It's not surprising to see an ETF tracking the Greek equity markets at the top of the list of best performing ETFs this week as the country successfully sold EUR 5 billion in new bonds, which should hold it over until at least April. While the news was positive, the Greek government had to pay a hefty risk premium to get the deal done, and it's likely that the Greek market will continue to be quite volatile for the near future. Basic Resources ETFs, which track a large contingent of miners, traded higher as the earthquake in Chile threatened to disrupt copper supply. Rounding out the top performers were automobile manufacturers and parts suppliers. With no major news explaining the industry's performance, we suspect investors were likely value shopping in the beaten-down sector.
The week's worst performing ETFs were all commodity-related funds tracking either agricultural products or natural gas futures markets. Investors in these products may blame good weather in both North and South America for the underwhelming returns. Favourable conditions have boosted prospects for a bountiful crop in the Southern Hemisphere and demand for natural gas to heat homes in the US trended lower as temperatures crept upwards.
