New ETF provider enters Australian market

Aii to launch six sector ETFs

By Wouter Klijn
Tue 09 Feb 2010

New provider seeks to launch ETFs tracking the financials, industrials and resources sectors.

Australian Index Investments (Aii), a subsidiary of Eurofinance Group, will launch a series of new exchange-traded funds (ETFs) over the next three months.

Aii was established in May last year amid the heightened interest in ETFs and Aii managing director Jim Socratous expects the interest to remain strong after having spoken with advisers and brokers.

Aii's ETFs differ from existing products in the Australian market because they track particular industry sectors.

"ETFs are the fastest-growing financial instruments and we believe there is a major need for sector ETFs," Socratous said.

The company, which was established in May last year, is preparing to issue six ETFs that will track the S&P/ASX 200 Financials index excluding Australian real estate investment trusts (A-REITs), the S&P/ASX 200 Energy index, the S&P/ASX 200 Financials index, the S&P/ASX 200 Industrials index, the S&P/ASX 200 Resources index and the S&P/ASX 300 Metals and Mining index.

ETFs are predominantly used as a passive investment, tracking a major index, but Aii's ETFs can be used in a more active way to increase exposure to sectors that are expected to do better than the market average, Socratous said.

"They will be appropriate for advisers to use as satellite investments when building core satellite portfolios," he said.

Aii has obtained all the required licences, Socratous said, but the company still needs to finalise a number of technical details before it launches the products.

The Australian Securities Exchange will host a seminar for financial advisers in Sydney in February, during which Aii will give more details on the use of sector ETFs.

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