iShares launches four locally domiciled ETFs

BlackRock Australia’s iShares business has released four new exchange-traded funds (ETFs) onto the Australian market, aimed at both retail and institutional investors and bringing the iShares range to 23 ETFs available on the Australian Securities Exchange (ASX).

The iShares S&P/ASX 20 tracks the 20 largest companies by market capitalisation in Australia according to S&P, with management costs of 0.24 per cent. iShares head of intermediary sales Tom Keenan described the ETF as a simple way for investors to gain core large-cap exposure.

The S&P/ASX Small Ordinaries ETF tracks the S&P top 300 companies excluding the top 100, and costs 0.55 per cent.

The iShares MSCI Australia 200 tracks the top 200 stocks in Australia based on the MSCI 200 index, which does not include foreign companies listed locally (such as Newscorp). It has the lowest management fees of the new products at 19 basis points.

The fourth product is the iShares high dividend ETF, which tracks the S&P/ASX Dividend Opportunities Index costing 0.30 per cent. It seeks to provide exposure to the highest dividend stocks in the S&P/ASX 300. It also seeks to generate high income without compromising return, Keenan said.

Keenan said this was the first domestically domiciled suite of ETFs in the market. He added that there had been a bottom-up push from advisers in a market that was now focused on transparency, moving towards fee-for-service and focusing on adviser remuneration and commissions.

When the US moved to a fee-for-service model it increased the demand for ETFs, and it was likely the Australian market would follow suit, Keenan said.

Self-managed super funds had been one of the early adopters of ETFs in Australia and were responsible for a large part of the uptake for ETFs here in the past few years, he said.