Retail investors focus on UK ETFs

Sep 11th, 2013 | By | Category: Equities

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Clients of Barclays Stockbrokers are continuing to favour UK-focused ETFs, according to new analysis from the UK’s largest execution-only retail broker.

Retail investors focus on UK ETFs

UK retail investors are continuing to focus on UK-linked ETFs, according to data from Barclays Stockbrokers.

Data for August 2013 revealed the iShares FTSE 100 UCITS ETF (Inc) (ISF) was the most traded ETF by clients of the broker for the month. The fund has now been the top purchased ETF by Barclays clients for fourteen weeks in a row.

The data also revealed the UK was a popular region with investors, with 27% of all client ETF purchases being focused on the UK. But whilst the UK economy has improved in recent months, this is more likely a result of a behavioural home bias, where investors (especially retail investors) focus on their domestic market, than a conscious active decision to overweight the UK.

Despite ongoing market volatility in emerging markets during August, the iShares MSCI Brazil UCITS ETF (Inc) (IBZL) entered the top ten purchased list for the month. The emergence of the Brazilian equity fund into the top ten suggests investors are becoming both more comfortable with the way the Banco Central do Brasil deals with inflation and progressively more confident in the outlook for the country’s economy.

Clients also focused on US-equity ETFs, with the iShares S&P 500 UCITS ETF (Inc) (IUSA) , which tracks 500 US large-cap companies, taking fifth place and iShares S&P SmallCap 600 UCITS ETF (ISP6), which offers exposure to US small-caps, taking tenth place in the top purchased ETFs for August.

Separate analysis also compared assets held in the top 10 ETFs for August 2013 and August 2012. Although the first and second placed ETFs remaining the same one year on, there was a shift in investor appetite away from fixed income, and a new focus on equity growth and income in August 2013.

For example, the iShares £ Corporate Bond UCITS ETF (SLXX) dropped to sixth place, from third in the top ten ETFs by assets held in August 2012, with the iShares FTSE 250 UCITS ETF (MIDD), iShares S&P 500 UCITS ETF (Inc) (IUSA) and iShares MSCI Emerging Markets UCITS ETF (Inc) (IEEM) all moving up positions in the top ten in August 2013.

Chris Stevenson, Barclays Stockbrokers, said: “The continued popularity of UK focused ETFs with our clients was evident in August, with FTSE ETFs comprising 60% of the top ten purchased ETFs for the month. The appearance of the iShares MSCI Brazil ETF in the top ten purchases made by clients perhaps suggests growing optimism for Brazil as eyes start to turn towards its hosting of the 2014 football World Cup and 2016 Olympics games.”

With seven funds in the top ten most traded for August 2013, iShares is clearly the favoured ETF provider among Barclays’ clients. However, whilst the iShares brand is undoubtedly the strongest in the ETF space, its fees are typically towards the top end of the peer group. An example of this is their FTSE 100 product – the iShares fund has a total expense ratio of 0.40% compared to 0.30% for the db X-trackers FTSE 100 UCITS ETF (XUKX) and just 0.10% for the Vanguard FTSE 100 ETF (VUKE).

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