A bonanza of fresh, cheap funds for the retail investor

HSBC is planning another series of emerging market exchange traded fund (ETF) launches as the price war in ETFs intensifies.

Retail investor confidence in using funds tracking more exotic indices is growing and HSBC is cranking up its aggression with planned launches in the first half of 2011 tracking the MSCI India, MSCI Emerging Asia and MSCI China A Share indices.

These products will go head to head with existing products already available from db x-trackers, Lyxor and iShares with a view to attracting inflows competing on price and tracking accuracy.

The price war has already started. HSBC’s recently launched MSCI Brazil has a TER of 0.6 per cent, which undercuts iShares’ version by 0.14 per cent. The TER does not include the final cost from tracking error or dealing costs, but consumers use it as a guide.

Farley Thomas, head of ETFs at HSBC, said: “Our current view is the market price for ETFs has fallen significantly since iShares entered the market. You’ve had falling prices from traditional tracker products and you’ve had big ETF providers enter the market, notably Credit Suisse.

“iShares deserves credit for creating a lot of momentum in Europe. They started launching their ETFs many years before Credit Suisse or us. They set their price at a time in the past when they were fantastic value relative to the only thing you could compare them to at the time – actively managed funds.”

The emerging markets area is potentially highly lucrative for new providers coming into the market. iShares’ MSCI Emerging Markets ETF is now the third most popular ETF listed on the London Stock Exchange by assets under management, with £3.18 million in assets. Only Lyxor Asset Management has a product with more than 6 months’ track record on the London Stock Exchange.

However, competitors warn that retail investors must question their retail broker or financial adviser to look more carefully at product availability, which may include going further afield to Euronext or Deutsche Boerse.

MJ Lyttle, managing director of Source ETF, says investors need to do their research before appointing an intermediary to execute their trades.

He explains: “The largest amount of ETF trading is on the Deutsche Boerse, the second is Euronext. The LSE is behind that. If UK investors can access the Deutsche Boerse, they would be better off. A retail investor should be thinking like an institutional investor.

“I would suggest that you push back on your broker and say it is their job to do this for you. I agree that a retail investor doesn’t have time to do this. The quality of intermediaries and what they bring to the table varies so quiz your broker.”

Joe McGrath, editor of What Investment, will be speaking at The World MoneyShow on Saturday 13 November 2010.


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12.15 pm – 6.30 pm Exhibition Hall Hours
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5.30 pm – 6.30 pm Drinks Reception & Prize
Draws in Exhibition Hall

8.30 am – 6.00 pm Registration Desk Open
9.30 am – 10.30 am Panel Discussions
10.30 am – 6.30 pm Exhibition Hall Hours
11.15 am – 1.00 pm Product Presentations
2.15 pm – 3.15 pm Panel Discussions
3.30 pm – 4.15 pm Product Presentations
4.30 pm – 5.30 pm Panel Discussions
5.30 pm – 6.30 pm Drinks Reception & Prize
Draws in Exhibition Hall


9.25 am – 10.00 am: Why developing countries are not experiencing a regular recovery from a regular recession, by Bill Bonner, founder and president of Agora Publishing
10.40 am – 11.25 am: CNBC Europe Investors' Clinic
11.25 am – 12.15 am: Roger Bootle, former group chief economist, HSBC, will examine the economic outlook.
12.45 pm – 1.30 pm: Mastering the Dow: Intraday Index Trading with ETX Capital
1.30 pm – 2.15 pm: Trading strategies with Sandy Jadeja, chief technical analyst of City Index
1.30 pm – 2.15 pm: Glenn Tompkins, senior instructor at VectorVest, on how to build a winning portfolio of shares customised for one’s personal investment style.
1.30 pm – 2.15 pm: How to pick solid companies to invest in at the right time, with Owen O’Malley, founder and CEO of TICN
3.45 pm – 4.30 pm: Short-term forex and indices trading with spread betting, by David Jones, chief market strategist, IG Index
4.30 pm – 5.30 pm: Russ Mould and the SHARES TEAM outline their key investment themes for 2011.

9.30 am – 10.30 am: A panel of currency experts will discuss what makes a currency move.
10.00 am – 10.40 am: Professor Fenton O'Creevy and Dr. Vohra of The Open University will reveal the results from their latest research, 11.15 am – 12.00 pm: With the balance of power shifting towards emerging markets and countries that have largely avoided the effects of the credit crisis, can financial markets bear the strain? By George Tchetvertakov, head of market research at Alpari
1.30 pm – 5.30 pm: PAID EVENT Steve Beaumont, instructor, Online Trading Academy, will teach you how to identify volatility that can work for you and against you.
2.15 pm – 3.15 pm: Which of the over 3,000 ETFs available are right for you? A panel of experts will give insight into how to vet an ETF and top recommendations on what to add to a portfolio.
4.30 pm – 5.30 pm: A panel of precious metals experts discuss how and where money should be placed for a glittering return.
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