Dear Dagen: What Indices Will the New Barclays Funds Track?
By Dagen McDowell
Senior Writer
TheStreet.Com
Do you know which indices Barclays is going to track with its new exchange-traded index funds?
-- Adel Daghmouri
Adel,
The S&P Super Composite 1500/Barra Value Index doesn't exactly fly off the tongue, but there may be an eager investor yet. We'll soon see.
TSC's Herb Greenberg reported last week that Barclays Global Investors is planning to launch a series of exchange-traded index funds that are similar to the Standard & Poor's Depositary Receipts (AMEX:SPY - news) , or SPDRs, that already trade on the American Stock Exchange.
But the unit of Barclays (NYSE:BCS - news) ADR has a lot more in mind.
The firm's Securities and Exchange Commission filing lists 45 indices. I can't reprint the whole thing but I will give you a taste.
Among the Standard & Poor's indices Barclays will track, you will find the ubiquitous S&P 500, MidCap 400, SmallCap 600, S&P 500/Barra Value, S&P 500/Barra Growth and eight others.
Then you've got four Dow Jones (NYSE:DJ - news) broad market indices, including the Large-Cap index; eight Dow Jones broad sector indices, including the Technology Sector and Financial Sector indices; and nine Dow Jones industry sector indices, including those tracking the Internet and real estate.
Lastly, you have 11 Russell U.S. equity indices, from the Russell 1000 and 2000 to the Russell 3000 Value and Russell 3000 Growth indices.
There.
These products will greatly expand your index trading options on the Amex. The current lineup of such products consist of SPDRs; the Nasdaq 100 Index Tracking Stock (AMEX:QQQ - news) ; MidCap SPDRs (AMEX:MDY - news) , which track the S&P MidCap 400 index; Diamonds (AMEX:DIA - news) , which track the Dow Jones Industrial Average; World Equity Benchmark Shares, which cover 17 country-specific indices (click here for a list), and nine Select Sector SPDRs (click here for a list).
As I have said on more than one occasion, these types of products will allow investors to trade shares of the underlying indices throughout the course of every trading day, unlike your typical mutual fund, which is priced only at the end of the day.
But you may have to wait until next year to trade these securities (or merely gauge investor interest). You also will have to wait to see what the underlying expenses of these products are. The fees are not in the filing.
These products may wind up being extremely popular among the institutional crowd, but I have to wonder if retail investors will be pouring their money into some of these rather narrow sector indices.
In some small way, these exchange-traded products are at odds with the concept of a mutual fund. After all, the mantra of the fund industry is that you buy and hold and hold some more. These Barclays products, which will certainly offer a panoply of options for your portfolio, are obviously designed for trading.
But then again, you can buy and hold a stock, too.
Personally, I'm waiting for the Manolo Blahnik all-shoe index.
Let Someone Else Operate
Here is one leftover reader comment that I received after last week's piece on the risks of buying your own stocks. It is worth sharing.
"I am a 52-year-old internist who has done about 19% a year in my pension and IRAs since the 1987 crash (I use an investment adviser with Fidelity exclusively)," writes Ed Hartman. "The only money I lost was the $100,000 account I managed myself, and that has since been turned over to the manager also.
"I am no baby and I am certainly not stupid, but my time is much better spent taking care of heart attacks and ulcers than making investment decisions. I do not want my investment adviser to take out my appendix any more than I want myself to run my portfolio."
I wouldn't want your adviser taking out any of my organs, either.
>>>This story found under MDY news. |
