iShares has added to its range of funds with the iBloomberg European resources fund.
Managed by Barclays Global Investors and domiciled in Dublin, the product is an exchange-traded fund that has been designed for long term growth. The fund will track the recently created Bloomberg European Investible Resources index, and is aimed at the experienced investor who is looking to add some diversity to their portfolio.
The index focuses on natural resources, including oil and gas, iron and steel, chemicals, mining, paper and forest products. Some of the companies that are listed on the index include British Petroleum, Royal Dutch Petroleum, BASF, Bayer, Total Fina and Shell Transport & Trading.
Exchange-traded funds have only been available in the UK for a short time. They combine elements of shares and funds. Like shares they can be traded at any time by a broker, and like funds they can provide access to a wide area of a market or an index. They do not have exit penalties or front-end charges but they do have commission,.
Investors may find this fund attractive because the Bloomberg Investible Resources index invests in resources that have a predictable value. It is therefore likely to be more stable than a tracker fund that invests in the Internet. But some investors may be put off exchange traded funds due to their complicated structure.
Barclays Global Investors introduced the iFTSE 100 fund in April 2000, which is linked to the FTSE 100 index and was the first ever exchange-traded fund in the UK. Looking at its performance over a six-month period, the iFTSE 100 fund fell in value by 3.2 per cent from January 15, 2001 to July 19, 2001.