ETFS eyes LSE with commodity platform
ETF Securities is to launch a new platform of equity ETFs on the London Stock Exchange, with zero per cent fees but with additional commodity exposure.
On offer are 11 benchmarks with commodity themes and two other portfolios, which are based on the large-cap US Russell 1000 and the small-cap US Russell 2000 indices.
Graham Tuckwell, chairman of ETF Securities, said: "The decision to launch equity ETFs on thematic sectors has come largely from our clients, who have consistently asked ETF Securities to provide them with more investment opportunities, particularly themes or sectors they are currently unable to access through ETCs."
The new platform of commodity sector equity ETFs will provide access to new global and European themes through several benchmarks.
Four products will track the Russell Global indices: the ETFS Russell Global Coal, ETFS Russell Global Gold, ETFS Russell Global Steel Large Cap and ETFS Russell Global Shipping funds.
The ETFS Russell 1000 fund and ETFS Russell 2000 funds will also follow the major Russell US equity baskets.
ETFs based on Dow Jones benchmarks will be the ETFS Dow Jones Stoxx 600 Basic Resources, ETFS Dow Jones Stoxx 600 Oil & Gas and ETFS Dow Jones Stoxx 600 Utilities funds.
ETFS has also included two energy funds in the launch, the ETFS WNA Global Nuclear Energy and ETFS DAXglobal Alternative Energy portfolios.
Finally, the two vehicles with exposure to water and agribusiness sectors will be the ETFS Janney Global Water and ETFS S-Net ITG Global Agri Business funds.
The ETFs are traded in dollars, euros and sterling, and the price for each of the products will reflect that of the corresponding sectors.
This is the company's first foray into equity ETF products. The launch broadens the asset classes offered to its European investors. It includes sectors that are currently unavailable through the firm's exchange-traded commodities (ETC) range due to the difficulties in getting exposure to the underlying assets.
Hector McNeil, managing partner at ETF Securities, said the decision to charge zero per cent fees on the products was designed to attract more customers to the offering. "We think investors are hurting very badly, and we thought a zero per cent TER would resonate well with them."
Although the recent financial crisis saw a brief suspension in trading of ETF Securities’ ETCs, which were backed by troubled US insurer AIG, a spokesperson for the company said the costs reflected market conditions rather than any problems with the ETCs.
"Our AIG-linked ETCs are now fully collateralised, with minimal to no counterparty risk. If prices are being affected, this would be due to the general market conditions at the moment as opposed to what happened to AIG."