John Spence

Flurry of Global ETF Launches in Early 2001

2000 was a busy year for exchange-traded fund (ETF) launches and asset growth. According to the American Stock Exchange (AMEX), assets in ETFs listed on the exchange reached $70.3 billion, nearly doubling the 1999 year-end total of $35.9 billion. Also, the total number of ETF products jumped to 92, compared to 32 the previous year.

And if the opening month of 2001 is any gauge for the upcoming year, expect plenty more ETFs to come to market worldwide.

Bloomberg Enters Index Licensing Game with European iShares

Barclays Global Investors (BGI) set a blistering pace in 2000, with 40 new iShares ETFs launched.

Yesterday BGI contiued the roll-out with plans to launch four pan-European sector exchange-traded funds to be listed on the London Stock Exchange (within extraMARK), and also on Euronext (within NextTrack). The new ETFs will be based on Bloomberg indexes, and are as follows:

• iBloomberg European Technology
• iBloomberg European Pharmaceuticals
• iBloomberg European Telecoms
• iBloomberg European Financials

BGI said it plans to launch the four funds on February 12, 2001. Annual management fees will be set at 0.50%.

The new ETFs join three other iShares that are currently traded in the UK: iFTSE 100, iFTSE TMT (Tech-Media-Telecom), and iFTSE ExUK. BGI said it plans to continue the expansion of iShares into other international markets.

Bloomberg recently announced its intention to create and market indexes for use as benchmarks for financial products through a new business extension, Bloomberg Index License. Aside from the four indexes listed above, Bloomberg so far has launched one other tradeable index, the Bloomberg European New Market Index, an index that tracks 50 mid-cap growth companies in Europe.

According to Bloomberg's rules and criteria for inclusion in its European Investable Indexes, constituents will be allocated to three weighting tiers:

• Tier 1 (Largest 10 Stocks) = 42.50%
• Tier 2 (Next 10 Stocks) = 37.50%
• Tier 3 (All remaining Stocks) = 20.00%

Also, all Bloomberg European Investable Indexes will be comprised of no more than 40 constituents each.

New York Life to Launch TechIES

New York Life Investment Management is planning to offer its first ETF, which will track the Pacific Stock Exchange (PSE) Technology 100 Index. Those catchy nicknames keep on coming - the new funds have been dubbed "TechIES," which stands for Technology Index Equity Shares. The new fund will trade on the AMEX, and will also be the first ETF to trade on the Pacific Exchange. The table below shows the historical performance of the PSE Technology 100 Index over the last five years.

Graph Courtesy of Pacific Stock Exchange                       

Over the past 10 years the PSE Tech 100 has posted higher annualized returns than any of the other nearly 150 worldwide indexes that IndexFunds lists with at least 10 years of data. It had returned 29.58% annualized over the past 10 years through December 2000.

TechIES will have a 2% sales charge. New York Life has released neither the expected launch date nor annual expense ratio for the new fund.

Goin' Global

There are currently three Trackers ETFs that trade on Euronext based on the following indexes:

• Dow JonesSTOXX 50 Index (launched 1/15/2001)
• Dow Jones EURO STOXX 50 Index (launched 1/15/2001)
• CAC 40 Index (launched 1/22/2001)

Euronext is a new exchange created by the merger of the Amsterdam, Brussels, and Paris exchanges - NextTrack is the segment of the exchange on which Trackers, the European version of ETFs, will be traded.

Merrill Lynch Investment Managers is the manager for STOXX 50 LDRS and EURO STOXX 50 LDRS, which both have annual management fees of 0.50%. Lyxor International Asset Management is the fund manager for the Master Share CAC 40, which has an annual expense ratio of 0.30%.

Euronext released the following statistics for the three existing Trackers ETFs.

* in number of shares
** in Euros
Source: Euronext

The Beat Goes On

To find out about other recent ETF launches and developments too numerous to list here, please visit our ETFzone.