New Listings: February 14-18
Credit Suisse launched four new equity ETFs on the Deutsche Börse. The funds include two money market vehicles as well as a global equity and an alternative energy equity product. The new money market ETFs track the performance of the Credit Suisse EONIA (Euro Over Night Index Average) TR Index, and Credit Suisse Fed Funds Effective Rate TR Index. Each has a total expense ratio (TER) of 0.04%, and both use swaps to track the performance of their benchmark index. The new global equity fund also uses synthetic replication to track the performance of the MSCI World Index, which is comprised of equities from 24 developed nations. It charges a TER of 0.21%, the lowest TER amongst all existing ETFs tracking this index. Finally, the alternative energy fund uses physical replication to track the performance of the Credit Suisse Global Alternative Energy Index. The index is comprised of the shares of 30 of the world’s largest players in natural gas, wind, solar, bioenergy, or geothermal/hydropower/fuel cells. Each of these five sectors is weighted at 20%. The TER for this fund is 0.57%.
HSBC launched an ETF tracking South African equities on the London Stock Exchange. The fund (LSE ticker symbol: HZAR) uses physical replication to track the performance of the MSCI South Africa Index, and it trades in both US dollars and pound sterling. The index is market-capitalisation weighted, and has a large concentration in the basic materials sector, which accounts for more than a quarter of the index's value. It charges a TER of 0.60%, a lower fee than that charged by any of the existing South Africa ETFs on the market. HSBC plans to eventually cross-list the fund on other European exchanges.
RBS Market Access launched a dozen funds on the Deutsche Börse, including ten monthly leveraged funds and two tracking euro currency hedged indices. Europe's existing leveraged funds all use daily leverage, making these the continent's first monthly leveraged ETFs. Longer-term investors may prefer monthly leverage as opposed to daily leverage as the effects of compounding returns and path dependency are somewhat mitigated by this approach. The monthly leverage funds track the performance of the EURO STOXX 50, FTSE 100, FTSE MIB, and DAX, as well as offering both long and short exposure to commodities, specifically the S&P GSCI Capped Component 35/20 Index. The long leveraged funds each track twice the monthly return of their underlying benchmark index, while the short funds track twice the monthly inverse performance of their respective indices, with the exception of the FTSE MIB and FTSE 100 inverse trackers, which are not levered. The leveraged short funds have higher fees than their long counterparts, on the order of 25 basis points annually. The S&P GSCI index includes exposure to 18 different commodities, with a cap of 35% weighting to any one commodity. There is also a secondary cap where none of the other 17 commodities can exceed 20% of the index’s value. The two funds that hedge exchange rate fluctuations between the euro and the U.S. dollar track the performance of the S&P 500 and the Japan TOPIX. Each index is weighted by market capitalisation. The S&P 500 fund has a TER of 0.30%, while the TOPIX fund charges 0.50%.
Best and Worst Performers
For the second week in a row, silver ETCs were among the best performing ETPs in Europe. Prices for the precious metal increased from a combination of low inventories and rising demand from both industrial users and investors. Coffee prices hit a 14-year high in US dollars, marking a doubling of futures prices in just the past year. Harvests have been weak in many major coffee-producing countries such as Brazil and Columbia. The Greek equity market surged. The market rally was led by financial shares after the National Bank of Greece made an offer to buy Alpha Bank AE, which it has since rejected.
An ETF tracking Vietnamese equities was the worst performer for the week as investors are showed concern about the performance of the Vietnamese economy in light of a recent currency devaluation, high interest rates and soaring inflation. Wheat and soybeans, which had been buoyed partially by concern over harvests, have taken a slight tumble as the weather appears not to have harmed crops in the US as much as expected, and as China continues to make efforts to curb inflation. European autos and parts companies also gave up some of their stellar gains from the prior week.
