Titanic Ending For Titan 40
In what may be a hint of things to come as ETFs battle each other for dominance in certain market sectors, State Street Global Advisors is scuttling its SSgA Dow Jones Canada Titans 40 Index Participation Fund.
The Titans 40 never posed a threat to its direct competitor, Barclays' iUnits S&P/TSE 60 Index Participation Fund, or i60. A spot check on August 20 tells the story: While both funds were trading at around $38.20, the volume on the i60 at 85,000 shares was more than 220 times the volume on theTitan 40 fund. Similarly, the i60's C$3.3 billion under management dwarfed the Titan, which had about C$173 million under management.
The termination and liquidation of the fund is effective November 1, 2002. The fund, launched in October 2000, is the first ETF to be terminated since the mass proliferation of ETFs began in 1998. The failure of the fund follows the prediction of Lipper analyst Don Cassidy, who concluded in his May report on the state of ETFs that when several funds are competing in the same space, investors will gravitate to one-usually the first to market. (i60 was launched in October 1999.)
Although the Dow Titan 40 was not the smallest ETF in terms of assets or volume, it was nevertheless the first SSgA fund to wind up on the chopping block. The fund's benchmark-not performance- was the major factor in the decision to terminate the product, says State Street principal Gus Fleites.
"I guess it is the first ETF to close," concedes Fleites. But the termination of the fund also shows that State Street is willing to make the hard decisions, he says. "We are comfortable with the rest of our lineup."
Japan: The Fastest-Growing ETF Market
Since Japan launched its first ETFs in July 2001, it has become the fastest growing ETF market-in terms of assets-in the world, according to Debbie Fuhr, head of ETF research at London-based Morgan Stanley.At present, 18 ETFs are listed on the Tokyo Stock Exchange and the Osaka Securities Exchange, with aggregate assets hovering at Y1.7 trillion (US$14.7billion). The latest addition to Japan's ETF cadre, sponsored by Nomura Asset Management Co.,tracks the FTSE Japan index and trades on theOSE. It was launched on July 4.
Interestingly, in mid-July 2002, The Nihon Keizai Shimbun bemoaned the failure of ETFs to attract individual investors, noting that the retail segment accounts for only about 20% of all trades. The newspaper's disappointment stems in part from the fact that ETFs in Japan were touted as a curative for an ailing market.
New ETF Launched in Japan
Nomura Asset Management Company Ltd. launched a new exchange-traded fund based on the FTSE Japan Index. The new ETF will trade on the Osaka exchange. A correspondent FTSE Japan futures contract was also launched on the exchange.
Mr. Yasuyuki Kato, Head of Global Quantitative Research at Nomura Securities said "We are delighted to launch this product on FTSE Japan and to add it to our current Japan Equity ETF range. This strengthens Nomura's ETF product range and gives international investors much easier access to the Japanese equity market."
BGI And Samsung To Offer ETFs in Korean Market
Barclays Global Investors (BGI), managers of iShares, and Samsung Investment Trust Management Company (SITMC) plan to launch an ETF based on the KOSPI 200 for listing on the Korea Stock Exchange. The ETF, named the KODEX 200, is expected to be launched in September. SITMC will manage the fund, while BGI North Asia will serve as the fund's investment advisor.
Six securities firms have signed on as Authorized Participants to distribute the new ETF. Launches from 4 ETF groups were scheduled to take place simultaneously on the Korean Stock Exchange in late September.
Borsa Italiana To Launch ETFs On New Trading Platform
The Italian Stock Exchange's new ETF trading platform has gone live. Now, the bourse plans to issue a request for proposals to create an ETF on the new S&P mid-45 index. Merrill Lynch has already registered its Stoxx and EuroStoxx LDRS for sale in Italy, as have the following sponsors: Credit Lyonnaise, Société Génerale and Unico. September appears to be the current target to trade ETFs.
Indexchange Expands ETF Range, Adding 14 New Funds
Indexchange Investment AG added 14 ETFs to its lineup in July. The funds mirror the STOXX 600 sectors: automobiles, basic resources, chemicals, construction, cyclical goods and services, energy, financial services, food and beverage, industrial goods and services, insurance, media, noncyclical goods and services, retail and utilities. The ETFs carry an annual administration fee of 0.5%.
BGI Plans iUnit based on Canadian REIT Index
Barclays Global Investors Canada has filed apreliminary prospectus with the regulatory authorities in each Canadian province and territory for iUnits S&P/TSX Canadian REIT Index Fund. The proposed iREIT will replicate the performance of the S&P/TSX Canadian REIT Index, which will be launched October 15. Subject to regulatory approvals and the launch of S&P's REIT index, the iREIT was scheduled to be available October 15 as well.
Deutsche Börse Lists its First Fixed-Income ETF
Deutsche Börse recently listed its first fixedincome ETF: Xavex SICAV Dynamic Bond Portfolio Fund. The new fund is issued by Xavex SICAV, based in Luxembourg; Deutsche Bank is the sponsor. Xavex SICAV is an actively-managed ETF benchmarked against the iBoxx Euro Overall index, which comprises more than 1,000 sovereigns, subsovereigns, collateralized and corporate bonds.