Barclays Global Investors says it is now offering the cheapest European sector exchange-traded funds, thanks to a change in the benchmark it uses.
IShares, which is managed by BGI, has teamed up with FTSE Group, which has launched a new set of eight European sector indices. The iShares ETFs, which were benchmarked to indices provided by Bloomberg, are now based on the new FTSE European Sector Index Series.
As a result of the change, iShares said the annual management fee on its range of eight European sector funds has been cut to 0.35% per year from 0.5%.
John Demaine, director of iShares says the ETF provider always tries to make sure investors get the investment tools they need. “Our range of exchange-traded funds must therefore be constructed to best reflect a particular market or sector,” he says. “The European sector iShares will benefit from being aligned to such a widely benchmarked index provider as FTSE.”
FTSE said the index series had been designed to allow fast and efficient trading for investors worldwide. The indices follow on from the launch of the FTSE Global Sector Index Series nearly two years ago. More products are expected to be launched on the index series soon.
These latest ETFs bring the total number of ETFs listed on FTSE’s European indices to 26, with almost E800m under management. The series covers eight of the most traded sectors, and provides investors with indices that have highly liquid constituents and low turnover, the group says.
Market makers in the iShares FTSE European Sector Funds include Dresdner Kleinwort Wasserstein, Goldman Sachs International, Merrill Lynch International and Morgan Stanley & Co International.
The new FTSE European sector indices will comprise a narrower set of more liquid stocks, with no more than 30 in each index, and will be weighted by free float market capitalisation.
The names of the new ETFs, reflecting each new index, are iShares FTSE European BKS (financials), iShares FTSE European Consumer Cyclicals, iShares FTSE European Consumer Non-Cyclicals, iShares FTSE European Media, iShares FTSE European Oil and Gas, iShares FTSE European Pharmaceuticals and Biotechnology, iShares European Technology and iShares FTSE European Utilities.
The sector ETFs are listed on the Extramark segment of the London Stock Exchange and on the Nextrack segment of Euronext – Amsterdam and are registered for sale to the public in Ireland, the Netherlands the UK and France.