Whatever you want to invest in, there’s an ETF available
IN THE United States, there is an exchange-traded fund (ETF) for everything you ever wanted to trade and plenty more that you had never even considered. While the likes of ophthalmology and nanotech ETFs have not yet made it across the pond, European investors should certainly be satisfied with the range of ETF products on offer. If you are after diversified exposure to a sector or an index, then you are likely to find an ETF that will meet your needs. They don’t quite track a portfolio of nanotech stocks, but here are four of the more esoteric funds on offer for UK investors.
PRIVATE EQUITY
Deutsche Bank’s db x-trackers listed its LPX MM private equity ETF almost two years ago on 17 January 2008 and it now has just over €103m in assets under management (AUM). Traditionally, private equity is an illiquid asset class and has been difficult for retail investors to access.
The ETF tracks an index operated by Basel-based LPX, a member organisation of listed private equity firms. It is designed to reflect the risk and return characteristics of the 25 global most liquid listed private equity companies covered by LPX. The index is diversified across regions, investment styles and currencies and there is a cap of 10 per cent for any single constituent. The total expense ratio (TER) is quite high at 0.7 per cent a year.
ASIAN PROPERTY
There has been plenty in the press about an Asian property bubble but if you think these concerns have been overdone, there’s an Asian property ETF for you.
BlackRock’s iShares offers a FTSE EPRA/NAREIT Asia Property Yield Fund, which offers exposure to listed real estate companies and real estate investment trusts (REITS) from developed Asian countries such as Hong Kong and Australia, which have a one-year forecast dividend yield of 2 per cent or greater. This year the ETF has risen 24.03 per cent, underperforming the underlying index by 0.49 per cent after the TER of 0.59 per cent has been taken into account.
LEVERAGED CURRENCY PAIR ETPS
Think the Aussie dollar has further to rise against the US dollar? ETF Securities offers a triple leveraged long Aussie, short US dollar exchange-traded currency ETF. It tracks a Morgan Stanley FX?index, which aims to reflect three times the daily percentage change between the two currencies, plus generates a collateral yield on the cash invested. The exchange-traded currency is 100 per cent collateralised and they are all backed by currency transactions entered into with counterparties. It has a management fee of 0.98 per cent.
ASIAN CONSUMER
The rise of the middle classes in emerging Asia has been one of 2010’s big themes and this is unlikely to change next year. For investors seeking exposure to the growth of the middle class in the developing world, Lyxor ETF launched its range of Asia ex-Japan sector ETFs in September this year. With an AUM of $48.7m, its emerging Asia consumer staples sector ETF tracks the MSCI AC Asia ex-Japan consumer staples TRN index.
The ETF has a fifth of assets exposed to China. Its largest holding is Wilmar International, an agribusiness group listed on the Singapore exchange.
The ETF has a TER of 0.65 per cent. Lyxor says it is in the process of applying for UK distributor status, which would make investors liable for capital gains tax (CGT) at 18 or 28 per cent on profits.