Will investors be tempted by these interesting-looking ETFs?
While ETFs have proved popular with investors, the British retail ETF market has been dominated by three large players: iShares, Lyxor, and Deutsche Bank's db x-tracker products. Latterly, HSBC (LSE: HSBA) has added itself to that list, and over the past few months has launched a range of ETFs tracking major stock market indices such as the FTSE 100, FTSE 250, and S&P 500.
Now, Royal Bank of Scotland (LSE: RBS) has entered the fray, launching six new ETFs on 1 July. Unlike HSBC's index-oriented products, which focus on the world's major economies, RBS's ETFs embrace emerging markets and commodities, with three ETFs in each of the two sectors.
And, it's fair to say, the ETFs in question are fairly distinctive, with what the bank describes as 'unique access to diversified indices from both Jim Rogers and Deutsche Börse.'
Broadly based
In each case, says Ben Board, RBS's UK director of Listed Product Sales, the ETFs track baskets -- of commodities, or shares -- that are more broadly based than most competing products.
Take the Jim Rogers metals index, for instance. The Dow Jones-AIG metals index tracks just six metals: aluminium, copper, nickel, zinc, gold, and silver. The Rogers equivalent, says Mr Board, tracks these and four others besides: lead, tin, palladium and platinum.
The same story emerges with respect to commodities.
"Look at some ETFs, and the commodity index is 70% oil," he says. "We think that if people want to track oil, they should track oil: the Rogers index is much broader, and is only 30% oil."
Likewise, he adds, the Deutsche Börse DAX indices are also broadly-based. "The DAX BRIC index, for example, not only has a cap of 10% per security but also a cap of 35% per country," he notes.
Ultimately, he adds, RBS intends to have a full range of ETFs aimed at the retail investor -- including, in time, ETFs tracking major stock market indices.
The bottom line
Charges, while higher than you'd pay for a simpler index-tracking ETF, don't seem massively out of line with prevailing rates in the market -- some are slightly higher than competing products, some slightly lower. And, of course, your money is buying you a broader base of commodities, stocks, metals and markets.
| ETF | Underlying index | TER |
|---|
| NYSE Arca Gold BUGS (LSE: GOLB) | Arca Gold Bugs Index | 0.70% |
| DAXglobal Asia (LSE: ASDX) | DAXglobal Asia | 0.70% |
| DAXglobal BRIC (LSE: BRDX) | DAXglobal BRIC | 0.70% |
| DAXglobal Russia (LSE: RUSD) | DAXglobal Russia | 0.70% |
| Jim Rogers International Commodity (LSE: RICI) | RICI | 0.85% |
| RICI‑M (LSE: RICM) | RICI Metals | 0.85% |
All in all, worth a look. And it will be interesting to see if the claims regarding the more broadly-based underlying indices tempt significant numbers of investors -- especially in the case of the two Rogers-based ETFs.
More from Malcolm Wheatley:
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