EUROPE - Axa Investment Managers is to bring the first European real estate ETF (exchange traded fund) onto the Euronext Paris exchange next Thursday, 2 December.
The ETF has an initial size of e75m and tracks the EPRA Euro-zone index created by the European Public Real Estate Association. The fund was launched in July 2004 in Luxembourg, but has not yet traded on an exchange.
From mid-July, the EPRA Euro-zone index is up 13.09%.
“On the ETF, the challenge was the fact that the market is not the most liquid in Europe,” said Axa Investment Managers head of index business development, Bruno Guiot.
“It is a good opportunity because the market is so thin that having an ETF where the market maker will do the job for you is great.
“If you are an investor, you have e10m to invest and you want a broad diversification of real estate in Europe, you buy it yourself on the market without specific knowledge of what you really have.
“The fact that you say, I’m not going to buy 29 different names on the market, I’m simply buying the ETF and the market maker will do his job by delivering to me the underlying portfolio - that is the right answer.”
The EPRA Euro-zone index only includes securities traded within Europe and the company must be a closed-end company listed on an official European stock exchange in order to qualify for inclusion.
Furthermore, companies must derive a specified percentage of their earnings from relevant real estate activities, defined by EPRA as the ownership, trading and development of income-producing real estate.
As of November 2004, the index comprised some 29 listed securities.Axa Investment Managers is also looking to launch a UK real estate ETF.
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