iShares has added the iBloomberg European telecoms fund to its range of European sector-based exchange traded funds.
Exchange traded funds are still a novel idea in the UK, although they have existed in the US for the past eight years. They have the liquidity of shares in that they can be traded on the stock exchange. But they invest in more than one company, which is a feature associated with unit trusts and investment trusts, not ordinary shares.
The iBloomberg European telecoms aims to reflect the returns of the Bloomberg investable telecoms index by investing in companies that make up the index. Companies that are listed on the index include British Telecom, Cable & Wireless, Carphone Warehouse, Deutsche Telecom, Nokia and Vodafone.
European companies are at the forefront of developments in telecommunications, particularly in respect of mobile phones. Market research group IDC have predicted that there will be more than 300 million mobile phone subscribers in Europe alone by 2004. However, there are no guarantees that consumers' appetites for increasingly hi-tech phones will continue.
The downturn in global stockmarkets may have affected investor's confidence in riskier specialist funds, but those who take an optimistic view of recent events could be tempted to buy into telecoms before the price of stocks increase.
The Bloomberg investable telecoms index fell to 479 points on April 30, 2001 from a 52-week high of 865 points on February 12, 2001.