Barclays Global Investors has launched the first UK Government bond ETFs available to UK investors. The iShares £ Index-Linked Gilts and the...

Barclays Global Investors has launched the first UK Government bond ETFs available to UK investors. The iShares £ Index-Linked Gilts and the iShares FTSE UK All Stocks Gilt have been launched in response, the company says, to UK investors “increasingly embracing ETFs as a low-cost and easy-to-use tool for accessing both fixed income and equity markets”. Separately, BGI says it is “encouraged” by a recent survey carried out by EDHEC, the French business school, Risk and Asset Management Research Centre which was sponsored by BGI-owned iShares. The survey sampled 1,000 European and UK institutional investors, private bankers and asset managers. Among the findings were: -Nearly two-thirds of the respondents are current or planned users of ETFs. -When comparing ETFs to alternative methods of indexed investing, over half the respondents think that the use of ETFs will increase in the near future, while only a third have the same opinion about futures, and other instruments score even lower. -Emerging markets (49 per cent) and commodities (36 per cent) are seen as future areas of development for ETFs. The study was based on a questionnaire structured around a series of consistent themes including using ETFs in practice, the role of ETFs in the asset allocation process, and the comparison between ETFs and several alternative index products. Chris Sutton, iShares chief executive for Europe and Asia excluding Japan, said: “This piece of research contributes to understanding the dynamics and the growth of the ETF market, which continues to grow at an impressive rate. The European ETF market has been enjoying outstanding development since its inception in 2000, both in terms of assets under management and the number of items. Admittedly, there were concerns raised over the lack of liquidity expressed by investors trading in the fixed income ETF market. However, all iShares ETFs are supported by a dedicated liquidity provider, who at all times ensures that the bid and offer prices are available on the stock exchange.” “Because of the unique characteristics of ETFs, and their creation and redemption mechanism, the true liquidity of an ETF is the liquidity of the shares or bonds it holds. The two newly launched gilt iShares funds tap into very liquid markets, which will translate into good execution for investors.” Overall, the total European ETF assets under management have grown by 49 per cent to £41.7 billion ($82.0 billion) in the year to September 2006.