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A staple diet from iShares

iShares, which is part of Barclays Global Investors, has added to its stable of European sector based exchange traded funds with the introduction of iBloomberg European staples.

This exchange traded fund aims to provide capital growth by tracking the newly created Bloomberg European investible staples index.

The index consists of large European companies involved in consumer products and services including cosmetics, electricity, food and gas. Christian Dior, Scottish Power and Tesco are examples of these companies.

Investors&#39 money is pooled to buy shares in companies that are listed on the index. Shares in exchange traded funds can be traded on the stock exchange like conventional shares. But like investment trusts and unit trusts, iBloomberg European staples invest in a range of shares which gives them the advantage of diversity.

This enables investors to gain exposure to well-known European companies easily if they feel that the market looks good. Similarly, they can sell their shares quickly if they do not want to weather the storm during market falls.

This may be an advantage for more sophisticated investors who are looking for an alternative way of gaining exposure to Europe. However, investors appear to be approaching stockmarket investments with caution at the moment and may not be willing to try a new concept.

Exchange traded funds may be too complicated to understand and investors may prefer to stay with familiar concepts like unit trusts.

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