• Inflows into ETFs to grow substantially this year   
• Many more ETFs expected to launch in 2008     
• ETFs a solution in volatile markets 

London, 29 January 2008:

Pioneering ‘second generation’ Exchange Traded Funds (ETF) provider SPA ETF Plc believes that 2008 will be the ‘year of the exchange traded fund’ in which many more ETFs will be launched in the UK. The result will be a transformation of the UK investment market with ETF providers taking a substantial amount of assets from traditional fund managers.  ETFs are now one of the fastest growing global investment products and the UK market looks set to continue its impressive expansion following the removal of stamp duty levy on overseas-listed ETFs in 2007.  Last year saw 100 ETF launches across Europe and there are now more than 120 ETFs listed on the London Stock Exchange (LSE) alone.

There are already many more planned launches for this year. Whilst the US has 533 ETFs with US$530.5 billion invested in them, Europe currently has 386 ETFs with US$125.9 billion of assets under management in them, but is set to catch-up. 

Daniel Freedman, Director of SPA ETF Plc, comments on the outlook for ETFs in 2008:  “SPA ETF has witnessed growing interest from investors looking for an alternative to actively managed investment products and this year we expect to see a substantial growth of assets under management across the sector. In response we expect to see many more launches of ETF products from providers.  “

A likely milestone for 2008 will be the advent of the first actively managed ETF being launched in the US. The efficiency which has helped establish the ETF platform may attract existing providers of actively managed funds to the ETF arena, as they look to protect their market share. Of course, moving to an ETF platform would not solve their performance issues – it is just a different approach. But this could broaden the appeal of the ETF sector to a new base of investors – particularly in an uncertain market. As a result, new issuance in 2008 is set to be very strong. 

“Given the recent market volatility, ETFs’ ease of tradability should prove attractive to investors in 2008 as they will need to work harder to generate returns than in previous years. As early adopter investors become familiar with traditional ETFs, they will start to seek out the next generation of funds which attempt to outperform the market. This will certainly appeal to those investors disappointed by poor performance and high fees or fed up with chasing their star manager as they move from fund to fund. “In 2008 we also believe the US providers of ETFs will start to list in Europe and the rest of the world as they search for profitable avenues for future growth, improving the competitiveness and attractiveness of the ETF market around the globe.”  

SPA MarketGrader ETFs utilise the performance of fundamentally driven indices created by US research company MarketGrader to provide private and institutional investors with access to a broad universe of US equities via an investment vehicle that has equal weighting, is rebalanced regularly, uses transparent data and selects stocks using 24 fundamental factors. Demonstrating the company’s growing presence as a global provider of ETFs, SPA ETF Plc which recently listed on the Borsa Italiana, following its listings last year on the London Stock Exchange (LSE) and American Stock Exchange (Amex).                                                                                                           Six SPA MarketGrader ETFs exist on the LSE, Amex and Borsa Italiana: 

• SPA ETF Plc MarketGrader 40
• SPA ETF Plc MarketGrader 100
• SPA ETF Plc MarketGrader 200
• SPA ETF MarketGrader Small Cap
• SPA ETF MarketGrader Mid Cap
• SPA ETF MarketGrader Large Cap

 Each of the SPA ETF Plc MarketGrader 40, 100 and 200 are based on MarketGrader’s ‘core’ indices of top-rated North American securities. Whilst the SPA ETF MarketGrader Small Cap, Mid Cap and Large Cap are ‘cap’ indices based on the top 100 North American stocks within each market capitalisation category.