EUROPE - NASDAQ has unveiled a European version of its US QQQ exchange traded fund.
The new NASDAQ-100 European Tracker has been registered for sale in the UK, Belgium and Ireland and trades on NASDAQ Europe under the symbol EQQQ.
ETFs allow an investor to buy a basket of stocks through a single security that tracks the returns of an index. They are considered to be a special type of index mutual fund, but are listed on exchanges and trade like shares.
John Jacobs, chief executive officer of NASDAQ Financial Products said: “The EQQQ provides European investors with low cost access to the entire range of companies in the NASDAQ-100 Index in European hours, on a European market.
“ETFs offer investors a range of benefits including low costs and diversity. There is great potential in the European marketplace which has accounted for the majority of new ETF product launches in 2002. Based on our experience in the US, our intention is that EQQQ will follow the success of our US product.
According to some reports, Nasdaq is also examining the possibility of introducing an ETF to track the Nasdaq Composite Index in the US, in the first instance.
The US version trades among institutions, intermediaries and retail investors with between 92m-95m shares traded per day. Some 10-15% of the shares traded already stem from European institutions. This number is now expected to increase. Recent research showed that ETF listings in Europe had grown from around US$430m in April 2000 to US$9.5bn by the end of October 2002.
The fund is denominated in euros. Nasdaq had made a point of keeping fees low - 20 basis points (0.2%) per year. This follows the likes of Merrill Lynch International who cut management fees for its Euro STOXX 50 and STOXX 50 LDRS from 0.50% to 0.35%
The appeal of ETFs still lies largely with the retail market. But institutions can use ETFs in several ways including as a way of equitising cash; buying and holding for long term investment; index-tracking core portfolio around which actively managed satellite investments can be positioned; regional or sectoral exposure; exposure to global markets; shorting or leveraging index exposure within hedge strategies; trading on margin.
Lehman Brothers International (Europe), Madoff Securities International Limited, Goldman Sachs International and Merrill Lynch International have agreed to be authorised participants in EQQQ and Berliner Effektengesellschaft and Madoff Securities International Limited will be market makers on NASDAQ Europe.
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