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ETF market expands

AUSTRALIA’S fledgling exchange traded fund (ETF) market has continued its steady growth with the launch of the first property-based product.

State Street Global Advisers has launched the streetTRACKS S&P/ASX 200 Listed Property Fund, which aims to track closely the composition and performance (before fees and expenses) of the S&P/ASX 200 Listed Property Trust Index.

ETFs are similar to managed funds (unit trusts).

A key difference is that they are listed on the stock exchange, so that buying and selling is equivalent to buying and selling shares.

The new product provides a simple means for investors to gain exposure to all of the major property trusts listed on the stock exchange.

State Street has previously launched two other ETFs, tracking the performance of the S&P/ASX 50 Index and the S&P/ASX 200 Index.

The State Street products are all index-style investments. That is, the aim is to match an underlying market index, rather than trying to outperform the index.

As such, these products are characterised by low fees.

The management expense ratio (MER) of streetTRACKS Listed Property is just 0.40 per cent, well below the ongoing cost of most managed funds.

Salomon Smith Barney launched Australia’s first ETF, IndexShares 100, in February 2001 and has followed up with a second product, IndexShares 100 High Yield Instalments.

BNP Paribas Asset Management also has entered the market with four actively managed access funds.

It offers four sector-specific products, which invest in Australian shares, Australian smaller companies and global shares, while a balanced fund invests in all major asset classes.

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