ETF opportunities as investors predict gains for FTSE

Jan 3rd, 2013 | By | Category: Equities

Nearly two-thirds of investors believe the FTSE 100 Index will finish 2013 higher than it did at the end of 2012, according to a survey of over 1,000 clients of Barclays Stockbrokers, the UK’s largest execution-only retail broker.

ETF opportunities as investors predict gains for FTSE

Investors are bullish on the outlook for the UK’s blue-chip index, according to a survey of clients of Barclays Stockbrokers.

Almost half of respondents reckon the FTSE will end the year between 6,001 and 6,500, and one in seven believes it will finish above 6,500.

Paul Inkster, Head of Product at Barclays Stockbrokers, said: “Our clients have expressed a positive view on how the FTSE 100 Index will perform this year and received an early boost yesterday as the FTSE pushed through the 6,000 barrier for the first time since July 2011, closing at 6,027.”

Known colloquially as the Footsie, the FTSE 100 tracks the performance of the 100 largest companies, as measured by market capitalisation, listed on the London Stock Exchange. The index is the most widely recognised benchmark of UK blue-chip companies.

For investors looking to access this index, which includes household names such as BP, HSBC, Vodafone and Tesco, a range of exchange-traded funds (ETFs) exists to cater for varying levels of risk appetite.

Basic buy-and-hold exposure can be achieved by one of the many conventional FTSE 100 ETFs available on the London Stock Exchange. iShares, db X-trackers, UBS and Amundi, among others, offer competitive products, though the cheapest is the Vanguard FTSE 100 ETF (VUKE), which charges just 0.10% per annum.

Active investors looking to magnify returns over short time periods could consider a leveraged ETF. Standard leveraged products, which gear up daily returns by two times, include the db X-trackers FTSE 100 Leveraged Daily ETF (XUL2), the ETFX FTSE 100 Leveraged (2x) ETF (LUK2) and the ComStage ETF FTSE 100 Leveraged (8H84). The cheapest of these is the ComStage ETF, which charges 0.45% per annum.

For the ultra bullish, industry newcomer Boost ETP has launched a triple-leveraged product: the Boost FTSE 100 3x Leverage Daily ETP (3UKL). This product has been geared up to deliver three times the daily return of the FTSE 100. This means, for example, that if the FTSE 100 rises by 1% on a particular day, the product will rise by 3%. Conversely, if the FTSE 100 falls by 1% then the product will fall by 3% (before fees). The Boost ETP charges 0.75% per annum.

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