London Stock Exchange. An introduction to ETFs

Transcription

1 London Stock Exchange An introduction to ETFs

2 Agenda 1. Product overview transparency, pricing and regulatory guidelines 2. Market overview 3. Further information and resources

3 Product overview transparency, pricing and regulatory guidelines

4 Questions - What is an ETF? - How to trade? - What is the London Stock Exchange order book? - What type of ETFs are available? - What are the costs?

5 What are ETFs? Exchange traded Transparent pricing Liquid Easy settlement UCITS/FCA Regulated Diversified Secured by assets Low Cost Shares Index Funds Exchange Traded Fund (ETF) ETFs are regulated and listed index funds that combine the diversification and cost benefits of index funds with the tradability and liquidity of securities

6 Advantages of ETFs Tradability & Liquidity ETFs can be traded intra-day Dedicated market maker support with continuous pricing throughout the trading day Transparency ETF portfolio holdings, the ETF performance and costs Prospectus documentation and summary factsheets readily available Security Fully-integrated clearing and settlement Counterparty risk of a trade is removed with central counterparty clearing Low cost ETFs provide instant market access at a low cost Diversification Diversified product range available on London Stock Exchange

7 How to trade an ETF? ETFs can be traded easily via your bank or broker. The two main ways to trade are either though direct market access to the order book or Request For Quote (RFQ) though your broker Unlike mutual funds, ETFs can be traded at any time during the trading day, at any size and a known price No extra fees for a fund manager to select stocks as ETFs are passive investments Standard settlement for ETFs is T+2, in line with UK shares Minimum required investment is only 1 share

8 Order book: liquidity and transparency The Bid price represents the maximum price that a buyer is willing to pay Market makers provide liquidity through two way (Bid and Offer) prices The Ask price represents the minimum price that a seller is willing to receive

9 Diversity of ETFs Wide range of equity index ETFs Established markets and sectors, global, regional or country-specific, Emerging Markets Fixed Income ETFs Sovereigns and corporates, money markets, range of maturity bands Themes and Alternatives Property, private equity, dividends, sharia-compliant, hedge funds Commodity ETFs Broad commodity indices Short and leveraged ETFs Equities and bonds

10 What are the costs? Low trade execution fee No stamp duty on buying ETFs listed on the London Stock Exchange No upfront or exit fees Low management fee

11 Key points ETFs are highly efficient and transparent They offer asset allocation precision and intra day trading flexibility There is no stamp duty on ETFs Most can be held in a SIPP or ISA Many ETFs have multiple trading currencies

12 Investment risks ETFs are not capital protected or guaranteed and investors should be prepared and able to sustain losses up to the total capital invested Investment in ETFs involves potential risks including among others, general market risks relating to the relevant index, credit risks, exchange rate risks, interest rate risks, inflationary risks, liquidity risks and legal and regulatory risks The value of an investment may go down as well as up and past performance is not a guide to the future Please consult your financial advisor before you invest in ETFs

13 Market Overview

14 European ETF growth European ETF assets have more than doubled to 443 billion (212% increase) since 2011 So far this year European ETF assets have risen by 22% Source: Deutsche Bank Europe Monthly ETF Market Review August 2015

15 London ETF/ETP market growth: Trades and turnover Total ETF/ETP on-exchange value traded for H was billion through 1.7m trades, up by 69% compared to H Number of Trades Turnover (millions)

16 Listings on London ETF market Number of new listings year on year ETFs ETPs

17 Growth of ETF market Growth driven by: simplicity and efficiency of product design diversity of exposure available transparency low cost broadening investor base, both institutional and retail Liquidity - continuously quoted throughout the trading day by dedicated market makers

18 London Stock Exchange ETF range 24 dedicated ETF issuers with total 825 securities currently listed - An additional 428 ETFs are also available in multi-currency lines 101 new ETFs listed in 2015 London Stock Exchange Group 15/09/15

19 Further Information & Resources

20 Further information: Publications Brochures and factsheets: Free delayed pricing service:

21 Educational video resources Educational video resources:

22 Disclaimer These slides do not represent solicitation by the London Stock Exchange plc of public saving and are not to be considered as a recommendation as to the suitability of the investment, if any, herein described. These slides are not to be considered complete and are meant for information and discussion purposes only. Information in these slides is not offered as advice on any particular matter and must not be treated as a substitute for specific advice. In particular the information provided does not constitute professional, financial or investment advice and must not be used as a basis for making investment decisions and is in no way intended, directly or indirectly, as an attempt to market or sell any type of financial instrument. Advice from a suitably qualified professional should always be sought in relation to any particular matter or circumstances. The contents of these slides do not constitute an invitation to invest in shares or bonds of the London Stock Exchange, constitute or form a part of any offer for the sale or subscription of, or any invitation to offer to buy or subscribe for any securities or other financial instruments, nor should it or any part of it form the basis of, or be relied upon in any connection with any contract or commitment whatsoever. The London Stock Exchange does not conduct investment business in the United Kingdom with private customers and accordingly services and products mentioned or referred to in this brochure are not available to such persons directly via the London Stock Exchange. The London Stock Exchange accepts no liability, arising, without limitation to the generality of the foregoing, from inaccuracies and/or mistakes, for decisions and/or actions taken by any party based on this document.