There it is, in two full pages of nearly unreadable ALL CAPS font in today’s Financial Review: iShares have landed in Australia. iShares are a particular group of Exchange Traded Funds (ETFs), made available from Barclays Bank (LON:BARC). ETFs are popular because they allow you to slice and dice the market into different categories. Stocks are bundled by region, sector, market cap, or perceived risk.
We devoted a whole chapter to ETFs in our book, “The Bull Hunter”. We’ll say today what we said then: ETFs will be to this bull market what mutual funds were to the last bull market. Investors have demanded more flexibility and selection from Wall Street. Wall Street has obliged, and is happy to collect trading fees.
Will ETFs fly in Australia? Barclay’s Australian listings give Australian investors more choices from foreign stocks. They don’t do much to improve your stock selection locally, though. In the local market, you have financial stocks and resource stocks and a handful of retail blue chips. In other words, the local market-especially junior resource shares and small cap stocks-is still a stock picker’s market. And anyway, who needs to slice and dice the performance of the ASX/200 as an index. The whole is doing nearly as well as any of the parts.
Markets and Money