LSE: Nine US Sector ETFs


London Stock Exchange : nine new US Sector ETFs..

Building on the significant and growing success of its European sector ETF products and platform, Source announces the launch of nine new US Sector ETFs. These new ETFs will for the first time give European investors the ability to access a derivative of the highly successful and popular S&P US Select sector indices through a European listed, UCITS III compliant ETF structure. Source worked together with S&P to make S&P’s existing indices UCITS III compliant and the result is the new S&P Select Sector Capped 20% indices.

The nine indices will cover the following sectors:

– Consumer Discretionary

– Consumer Staples

– Energy
– Financials
– Health Care
– Industrials
– Materials
– Technology
– Utilities

US sector ETFs have been trading domestically since December 1998 and have gained tremendous popularity in the US domestic market. Total US Sector ETF assets under management (‘AuM’) currently amounts to US$76 billion, representing 12% of the total US ETF AuM. The nine SPDR US Select Sector ETFs account for 41% of the total US Sector ETF AuM and have average daily trading volumes that represents 59% of overall US sector market average daily turnover. However, due to restrictions on the holding or trading of U.S. listed funds, many European investors have not been able to access this market and its accompanying liquidity.

The new S&P Select Sector Capped 20% indices were developed by S&P specifically in order for Source to be able to deliver UCITS III compliant US Sector ETFs. Like the traditional S&P 500 Select Sector indices, the constituents of the new S&P Select Sector Capped 20% indices are members of the S&P 500 index. Each constituent is weighted by its float-adjusted market capitalisation and is capped at 20%.

Reid Steadman, Senior Director of Exchange Listed Product at S&P Indices, said of the new initiative: “These new indices open up significant potential for US sector ETFs in the European marketplace. Source has established itself as the market leader for innovative sector products and Standard & Poor’s and Source have collaborated to bring the highly popular US Select Sectors in a UCITS III compliant format to the European investment community. Standard & Poor’s and Source have a very strong relationship already with the S&P GSCI commodity indices, and we are excited to now expand that relationship into equity indices.”

Source delivered similar innovation in the European sector space with the launch of its range of STOXX 600 Optimised Supersector ETFs at the end of July 2009. Source’s European sector products have raised over EUR980 MM ($1.4 BN) in four months, representing a 14% market share. They continue to display the value of concentrated trading liquidity to a broad range of institutional investors. In October and November 2009, Source’s European sector ETFs accounted for 59% of overall European sector ETF trading flows (according to Deutsche Börse/Cascade).

The addition of these new US Sector ETFs brings Source’s product range to 68 across the equity and commodity segments of the market. Source has raised over US$3 BN in assets since its launch in April 2009 and is the fastest growing new entrant to the Exchange Traded Products market since the market’s inception in 2000.

Source UK Services Limited is regulated by the UK Financial Services Authority.

Source: ETFWorld 

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