Investments  

Product review: Lyxor Ucits European Quality Income ETF

Lyxor Asset Management has launched a new exchange-traded fund (ETF) focusing on European equities.

The firm, a wholly owned subsidiary of Société Générale, is launching the ETF following the success of Lyxor’s recently launched SG Global Quality Income ETF, which has so far raised almost $550m of assets.

The Lyxor Ucits ETF SG European Quality Income fund aims to provide income based on companies with solid fundamentals as well as the potential for capital appreciation.

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Its basic principle is based on the largest portion of historical total returns of equity markets coming from dividend yield and the belief that high quality companies tend to outperform poorer quality companies.

The index aims to deliver a risk profile similar to low volatility strategies with the added advantage of a higher dividend yield – 4.7 per cent as at 10 September 2013.

The product’s base currency is euros and the annual charge is 0.45 per cent with no initial charge.

www.lyxor.com

Comment

ETFs have been increasingly popular over the past five years. But it begs the question, are there now too many to choose from? It must make it very difficult for investors to decide which product is right for them.

In fact, this launch pushes the firm towards its 20th launch this year alone, after launching 17 emerging market ETFs earlier this year.

The firm now has more than 60 offerings, becoming the UK’s fourth largest ETF provider.

But too much choice need not be a negative. This fund gives investors the opportunity to invest in a smaller geographical space, following the launch of Lyxor’s Global Quality Income product earlier this year.

Having raised nigh on $550m of assets, the strategy is obviously popular to the investor and having a smaller area to invest in can attract some investors who are sceptical about leaving Europe for their investments.