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Sunday, 14th April 2024
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The forthcoming launch of Ireland’s first Exchange-traded fund (ETF) will be warmly welcomed by investors, both institutional and retail (see pThe forthcoming launch of Ireland’s first Exchange-traded fund (ETF) will be warmly welcomed by investors, both institutional and retail. (see page 1, 11) age 1, 11).
The fund, which is traded like a share, will allow investors to get access to the top 20 Irish stocks, without the expense involved in purchasing each share separately.

Since their launch in the US in 1993, ETFs have experienced significant growth, and the total global market now stands at around $300 billion. The bonds are traded on most of the world’s leading exchanges, and offer investors an easy, and cost-efficient method of getting exposure to different markets/sectors.

The fund is likely to be popular amongst institutional investors in the US, as well as the retail/institutional market in Ireland, and it is expected that there will be reciprocity in the relationship with the States – ie they will be able to invest in the Irish ETF, and Irish investors will be able to invest in US ETFs through the ISE in Dublin.

If additional ETFs tracking, for example, US TMT stocks, or the S&P index, become tradable on the ISE, which is hoped will happen further down the line, it will make investing in these markets much cheaper and easier for Irish retail investors, a move which is very much welcome, and will give investors another outlet for their much heralded SSIA funds next year.

Dubai
With Irish investors making their presence felt on the international property market, to the extent that foreign markets now have three types of purchasers – local, international and Irish – alternative methods of investing in international property markets should also be of interest. Apart from buying a property outright, another method of getting exposure to a market is through a property fund.

On page 10, we look at a new fund launched by Amlak Finance, the largest Islamic finance company in the United Arab Emirates (UAE). Dubai has been grabbing the headlines of late as a property investment destination, with a host of English footballers, including David Beckham and Michael Owen, purchasing property on the Palm Islands, a series of man-made islands on Dubai’s Jumeirah coast.

But buying property in an Arab location is very different to buying in Ireland, so for more cautious investors, investing through a fund may be the more sensible option. Minimum investment is $25,000.

Life assurance
Moves made by Minister for Finance Brian Cowen in his inaugural Finance Bill have surprised the life assurance industry. (See page 5). What is apparently a mechanism for making it impossible for tracker bonds to avoid paying tax when the bond matures under the present gross roll-up scheme, looks likely to have serious long-term implications for the industry, if the amendments to Section 38 are enacted as proposed in the Bill. Companies will need to make considerable changes to their tracker products, it they are to continue to be attractive under the new Bill.

However, the industry has arranged a meeting with the Department of Finance to discuss the matter, and it is hoped that this can be resolved before the Bill is enacted.

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