Only 2 First Of A Kind ETFs In 2015

A total of 94 exchange traded funds (ETFs) have been launched so far this year in Europe, including currency-hedged versions of existing funds, but only three of them can truly claim to offer investors exposure to a new sector of the market, according to Morningstar.

Launches this year range across the whole market, from low carbon equity indexes and S&P 500 buybacks to long-dated U.S. Treasuries and convertible bonds. Of the new funds, 17 are tracking equity sectors like exporters or technology stocks, and 19 track fixed income indexes.

The two “new” funds are also fixed income ETFs (see below).

Jose Garcia Zarate, senior fund analyst at Morningstar, said: “I would think that one of the reasons is that 2013 and 2014 were the years of explosion in the likes of strategic beta ETFs and this meant that we had more “firsts”, whereas in 2015 what we have is just an expansion and tweaking of existing themes.”

1) db X-trackers II Harvest CSI China Sovereign Bond UCITS ETF (ticker CGB)

This physically replicated fund is the first ETF in Europe to invest in Chinese sovereign debt and has annual fees of 0.55 percent.

It tracks the CSI Gilt-Edged Medium Term Treasury Note Index, which is made up of 35 Renminbi-denominated bonds that are traded in Shanghai, Shenzhen and China’s interbank bond market. The average duration of the bonds is five years and the ETF has a yield to maturity of around 3.3 percent.

2) iShares iBonds Sep 2018 USD Corporate UCITS ETF (ticker Ul18)

This ETF tracks U.S. fixed-rate, corporate bonds which expire between October 2017 and September 2018. It costs 0.10 percent per year.

The index is weighted by market capitalisation, meaning those bonds with the most outstanding debt are given the highest weight. There is a cap of 3 percent per issuer. It has fallen 0.35 percent in three months.