New iShares Euro Stoxx ETF ditches banks

An Exchange-Traded Fund offering passive exposure to European companies, without the lag from the region’s troubled banks, has launched on the London Stock Exchange.

The iShares Euro Stoxx 50 Ex-Financials Ucits ETF gives investors a broad, potentially less volatile, way to access the Eurozone, says parent BlackRock.

The fund will hold the stocks in the index, which includes blue chip companies from 12 countries, but will exclude banks and insurance companies.

Its total expense ratio is 20 basis points.

Head of product development for iShares EMEA, Tom Fekete, says: “Eurozone financial stocks are likely to exhibit volatility in 2014 and this ETF provides a building block for investors to express their views, by either side-stepping the sector or specifically targeting it by adding other financials-focused funds or single stocks to their portfolios.”

The ETF is the first to sport an international security structure that makes for more efficient settlements across multiple European bourses by processing trades through a single hub.

The system is the fruit of a partnership between iShares owner BlackRock and Euroclear Bank which was cemented in June.

Usually ETFs listed on several European exchanges settle in hte national central securities depository of the exchange where a trade was executed.

Euroclear Bank global head of international markets Stephan Pouyat says the new international ETF class simplifies issuance and standardises settlement across Europe making it easier for investors to trade ETF shares.

“The realisation of this new international ETF asset class marks another step in the development and maturation of the European ETF market. This will ultimately improve liquidity in the market, which should have a positive effect on processing costs for the end investor,” he explains.