Tuesday, December 21, 2010

Australian Exchange Traded Fund Range Bolstered By New iShares ETFs

The choice for ETF investors just got a little broader. Earlier this month BlackRock launched 4 new ASX listed Exchange Traded Funds all covering the Australian stock market. The table below list each of the 4 new funds.

ASX Code Fund Name Purpose of Fund
ILC iShares S&P/ASX 20 Tracks the performance of the S&P/ASX 20 Index
IOZ iShares MSCI Australia 200 Tracks the performance of the MSCI Australia 200 Index
ISO iShares S&P/ASX Small Ordinaries Tracks the performance of the S&P/ASX Small Ordinaries Index
IHD iShares S&P/ASX High Dividend Provides exposure to 50 of Australia's larger high dividend paying stocks

New iShares Exchange Traded Funds

There were already a number of iShares ETFs trading on the Australian Stock Exchange, however up until now none of them provided any exposure to Australian share indexes - they were all international.

ILC - iShares S&P/ASX 20

This ETF aims to reproduce the performance of the S&P/ASX 20 Index. This index comprises the 20 largest companies trading on the ASX. You can view the components of the S&P/ASX 20 index (or indeed any of the S&P indexes) on the Standard and Poors website (try http://www.standardandpoors.com/indices/main/en/au.

IOZ - iShares MSCI Australia 200

This fund tracks the broader based MSCI Australia 200 index. Although I couldn't uncover the exact make-up of the index, it includes the largest 200 companies listed on the ASX (you can read more about the underlying index here - http://www.mscibarra.com/products/indices/domestic_equity_indices/australia/msci_australia_200_index/).

ISO - iShares S&P/ASX Small Ordinaries

The Small Ordinaries index is made up of around 200 ASX-listed small capitalisation stocks. From memory, I think the index is made up of the companies from the ASX 300 index which are outside the ASX 100 (the smaller end of the ASX 300 if you like).

I quite like this index as it contains some very good quality companies, many of which are growing quite rapidly. I think one of the advantages of this fund is that the Small Ordiniaries index performs better at a different stage of the economic cycle than some of the Large Cap indexes.

IHD - iShares S&P/ASX High Dividend

This last new ETF seeks to replicate the performance of the S&P/ASX High Dividend index. The index comprises 50 high dividend yield companies drawn from the ASX 300. Once again, you can read more on the eligibility criteria on the Standard and Poors website.

Each of these new ETFs can be bought and sold on the Australian Stock Market through your Stock Broker just like normal shares. For investors seeking broad exposure to Australian shares as part of their strategic asset allocation, these new exchange traded funds could be quite useful.


2 comments:

Radha said...

fantastic blog sir
very informative post.

Radha said...

fantastic blog sir i just love it.