John Spence
ETF Based on Dow Begins Trading on European Exchange
John Spence
Thursday, May 17, 2001
Dow Jones Indexes announced that it has licensed Paris-based Lyxor Asset Management to issue the first ETF in Europe based on the Dow Jones Industrial Average. The fund began trading today on the Euronext exchange, and has an annual expense ratio of 0.50%.
The launch is significant because it represents the first time that European investors will have access to an ETF that tracks a broad U.S. index, although ETFs tied to broad European and global indexes have been available.
"The tax-efficient structure adopted and the appeal for such a well-known U.S. global equity index will attract many retail and institutional investors," said Isabelle Bourcier of Société Générale Group, of which Lyxor is a subsidiary.
In the U.S., Diamonds (DIA), which are also based on the Dow Jones Industrial Average, have been around since 1998. This domestic ETF held over $2 billion in total net assets as of the end of April, according to Morningstar.
The new ETF, or what the Europeans have dubbed "trackers," is called The Dow Jones Industrial Average Master Unit. Currently, there are 12 ETFs that trade on Euronext, broken down into 4 families:
|
Master Family
|
| Fund name |
Index |
Expense ratio |
Inception date |
| Dow Jones Master Unit |
DJ Industrial Average |
0.50% |
5/17/01 |
| Master Share CAC 40 |
CAC 40 |
0.30% |
1/22/01 |
| Master DJ Euro Stoxx 50 |
DJ Euro Stoxx 50 |
0.40% |
3/13/01 |
Source: Euronext
|
iShares Family
|
| Fund name |
Index |
Expense ratio |
Inception date |
| iBloomberg European Technology |
Bloomberg European Investable Technology |
0.50% |
2/12/01 |
| iBloomberg European Telecoms |
Bloomberg European Investable Telecoms |
0.50% |
2/12/01 |
| iBloomberg European Financials |
Bloomberg European Investable Financials |
0.50% |
2/12/01 |
| iBloomberg European Pharmaceuticals |
Bloomberg European Investable Pharmaceuticals |
0.50% |
2/12/01 |
Source: Euronext[/:Author:]
|
EasyETF Family
|
| Fund name |
Index |
Expense ratio |
Inception date |
| EasyETF Euro STOXX 50 |
DJ EuroSTOXX 50 |
1.00% |
4/25/01 |
| EasyETF STOXX 50 Europe |
DJ STOXX 50 |
1.00% |
4/25/01 |
| EasyETF Global Titans 50 |
DJ Global Titans |
1.00% |
4/25/01 |
Source: Euronext[/:Author:]
|
LDRS ("Leaders") Family
|
| Fund name |
Index |
Expense ratio |
Inception date |
| DJ STOXX 50 LDRS |
DJ STOXX 50 Index |
0.50% |
4/11/01 |
| DJ EuroSTOXX 50 LDRS |
DJ EuroSTOXX 50 Index |
0.50% |
4/11/01 |
Source: Euronext
The above list will undoubtedly look different in the coming months, as State Street Global Advisors is set to unleash a myriad of ETFs on Euronext, as well as on the Australia and Singapore exchanges. Already, several AMEX-listed ETFs are cross-listed on the Singapore exchange, and AMEX says it will continue to cross-list and cross-trade ETFs with other exchanges in its vision of a global ETF trading platform.
You think we're kidding?
Boston-based KLD, which maintains the Domini 400 Social Index, today announced why it removed the third largest holding in the index, Wal-Mart (WMT), in February. KLD cited Wal-Mart's inactivity in cracking down on sweatshop conditions in overseas vendor factories. As of January 31, 2001, Wal-Mart comprised 3.87% of the index, according to KLD.
"Wal-Mart's market dominance puts it in a unique position to lead retailers in a clean up of sweatshop abuses," said Peter D. Kinder, president of KLD. "To date it has declined to do so."
The move shows that KLD is very serious in its efforts to keep the Domini 400 a "clean" index. First launched in 1990, the benchmark has become the standard for socially responsible investing (SRI). Wal-Mart has been a solid performer for any portfolio since 1990:
Source: Reuters data
Earlier this week, Domini Social Investments (DSI) released a statement urging Nordstrom shareholders to vote on a resolution regarding Nordstom's disclosure of labor practices. Domini Social Investments asked the company to report on its efforts to deter sweatshop practices at hundreds of its contract suppliers around the world.
DSI is the manager of the the Domini Social Equity Fund (DSEF), which is based on the Domini 400 index. The fund held nearly $1.3 billion in assets as of the end of April, according to Morningstar, and Nordstrom is a 0.04% holding.
"Sweatshop abuses are a disgrace that can only be stopped if companies like Nordstrom step up to the plate and take responsibility for holding their suppliers accountable," said Amy Domini, founder and managing principal of Domini Social Investments.
Nordstrom should pay heed. Today's Wal-Mart announcement is a shot across the bow indicating that KLD is serious about using the Domini 400 Social Index to proactively influence corporate behavior. Although DSI is the one exerting pressure on Nordstrom, it is apparent that KLD will not hesitate to drop the company from the index if it feels it is not adequately progressing in the area of labor practices.
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