In response to the growing interest of professional and individual investors in its exchange-traded funds, Euronext is adopting a new classification for its NextTrack segment dedicated to trackers and active ETFs. From now on, NextTrack will be made up of the four compartments described below.
- Market-index trackers: ETFs tracking national equity market indices such as the CAC 40, AEX, BEL 20, Topix, etc.; equity indices for regions (North America, euro zone, etc); emerging market indices (China, Brazil, etc.); market sector indices (energy, manufacturing, etc.); and bond market indices (government issues, corporate bonds, etc).
- Commodity market trackers: ETFs tracking the performance of a basket of commodities (farm products, ferrous metals, precious metals, energy) priced on the basis of commodity futures.
- Strategy index trackers: ETFs tracking the performance of indices based on investment strategies such as style indices (small and midcaps stocks, growth stocks, high-yield stocks, etc.), leveraged indices, indices incorporating an option strategy, and indices based on fundamental analysis criteria.
- Active ETFs: index-based ETFs with a structured component for leverage, guaranteed principal or inverse performance.
With this classification, Euronext aims to preserve both the legibility of the NextTrack offering and easy access to information on products, while at the same time adopting an approach based on the logic of portfolio management. The new classification also reflects Euronext's continued commitment to the development of this high-growth segment.
Over the past two years, the number of products traded on NextTrack has more than tripled, rising from 53 ETFs in January 2005 to 193 today and the range of underlying assets has been rapidly extended, with funds now offering exposure to 138 different indices. In the first quarter of 2007, the market welcomed a number of innovative products, among them strategy index trackers. ETFs are winning increasing favor, with assets of the funds represented now totaling more than €50 billion and the number of trades in these products doubling from 2005 to 2006. In the first quarter of 2007, daily trading averaged close to €250 million, showing that ETFs are now a widely accepted tool for investment management.
